Maker Money

Economic characteristics

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Money is generally considered to have the following characteristics, which are summed up in a rhyme found in older economics textbooks and a primer: "Money is a matter of functions four, a medium, a measure, a standard, a store." That is, money functions as a medium of exchange, a unit of account, and a store of value.^[2]^[3]^[4]

There have been many historical arguments regarding the combination of money's functions, some arguing that they need more separation and that a single unit is insufficient to deal with them all. One of these arguments is that the role of money as a medium of exchange is in conflict with its role as a store of value: its role as a store of value requires holding it without spending, whereas its role as a medium of exchange requires it to circulate.^[4] 'Financial capital' is a more general and inclusive term for all liquid instruments, whether or not they are a uniformly recognized tender.

Medium of exchange

Main article: Medium of exchange

Money is used as an intermediary for trade, in order to avoid the inefficiencies of a barter system. Such usage is termed a medium of exchange.

Unit of account

Main article: Unit of account

A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt.

Divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again.
Fungible: that is, one unit or piece must be exactly equivalent to another, which is why diamonds, works of art or real estate are not suitable as money.
A specific weight, or measure, or size to be verifiably countable. For instance, coins are often made with ridges around the edges, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.

Store of value

Main article: Store of value

To act as a store of value, a commodity, a form of money, or financial capital must be able to be reliably saved, stored, and retrieved — and be predictably useful when it is so retrieved. Fiat currency like paper or electronic currency no longer backed by gold in most countries is not considered by some economists to be a store of value.

Money

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Money is any token or other object that functions as a medium of exchange that is socially and legally accepted in payment for goods and services and in settlement of debts. Money also serves as a standard of value for measuring the relative worth of different goods and services and as a store of value. Some authors explicitly require money to be a standard of deferred payment.^[1]

Money includes both currency, particularly the many circulating currencies with legal tender status, and various forms of financial deposit accounts, such as demand deposits, savings accounts, and certificates of deposit. In modern economies, currency is the smallest component of the money supply.

Money is not the same as real value, the latter being the basic element in economics. Money is central to the study of economics and forms its most cogent link to finance. The absence of money causes an economy to be inefficient because it requires a coincidence of wants between traders, and an agreement that these needs are of equal value, before a barter exchange can occur. The efficiency gains through the use of money are thought to encourage trade and the division of labour, in turn increasing productivity and wealth.

Debt & Arguments against debt

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Some argue against debt as an instrument and institution, on a personal, family, social, corporate and governmental level. Islam forbids lending with interest even today, while the Catholic church allowed it from 1822 onwards, and the Torah states that all debts should be erased every 7 years and every 50 years.

Debt will increase through time if it is not repaid faster than it grows through interest. This effect may be termed usury, while the term "usury" in other contexts refers only to an excessive rate of interest, in excess of a reasonable profit for the risk accepted.

In international legal thought, Odious debt is debt that is incurred by a regime for purposes that do not serve the interest of the state. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.

Levels and flows

Global debt underwriting grew 4.3% year-over-year to $5.19 trillion during 2004.

Inflation indexed debt

Borrowing and repayment arrangements linked to inflation-indexed units of account are possible and are used in some countries. For example, the US government issues two types of inflation-indexed bonds, Treasury Inflation-Protected Securities (TIPS) and I-bonds. These are one of the safest forms of investment available, since the only major source of risk — that of inflation — is eliminated. A number of other governments issue similar bonds, and some did so for many years before the US government.

In countries with consistently high inflation, ordinary borrowings at banks may also be inflation indexed.

Debt & Effects of debt

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Debt allows people and organizations to do things that they would otherwise not be able, or allowed, to do. Commonly, people in industrialised nations use it to purchase houses, cars and many other things too expensive to buy with cash on hand. Companies also use debt in many ways to leverage the investment made in their assets, "levering" the return on their equity. This leverage, the proportion of debt to equity, is considered important in determining the riskiness of an investment; the more debt per equity, the riskier. For both companies and individuals, this increased risk can lead to poor results, as the cost of servicing the debt can grow beyond the ability to pay due to either external events (income loss) or internal difficulties (poor management of resources).

Excesses in debt accumulation have been blamed for exacerbating economic problems. For example, prior to the beginning of the Great Depression debt/GDP ratio was very high. Economic agents were heavily indebted. This excess of debt, equivalent to excessive expectations on future returns, accompanied asset bubbles on the stock markets. When expectations corrected, deflation and a credit crunch followed. Deflation effectively made debt more expensive and, as Fisher explained, this reinforced deflation again, because, in order to reduce their debt level, economic agents reduced their consumption and investment. The reduction in demand reduced business activity and caused further unemployment. In a more direct sense, more bankruptcies also occurred due both to increased debt cost caused by deflation and the reduced demand.

It is possible for some organizations to enter into alternative types of borrowing and repayment arrangements which will not result in bankruptcy. For example, companies can sometimes convert debt that they owe into equity in themselves. In this case, the creditor hopes to regain something equivalent to the debt and interest in the form of dividends and capital gains of the borrower. The "repayments" are therefore proportional to what the borrower earns and so can not in themselves cause bankruptcy. Once debt is converted in this way, it is no longer known as debt.

Debt & Debt ratings, risk and cancellation

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Risk free interest rate

Main article: risk-free interest rate

Lendings to stable financial entities such as large companies or governments are often termed "risk free" or "low risk" and made at a so-called "risk-free interest rate". This is because the debt and interest are highly unlikely to be defaulted. A good example of such risk-free interest is a US Treasury security - it yields the minimum return available in economics, but investors have the comfort of the (almost) certain expectation that the US Treasury will not default on its debt instruments. A risk-free rate is also commonly used in setting floating interest rates, which are usually calculated as the risk-free interest rate plus a bonus to the creditor based on the creditworthiness of the debtor (in other words, the risk of him defaulting and the creditor losing the debt). In reality, no lending is truly risk free, but borrowers at the "risk free" rate are considered the least likely to default.

However, if the real value of a currency changes during the term of the debt, the purchasing power of the money repaid may vary considerably from that which was expected at the commencement of the loan. So from a practical investment point of view, there is still considerable risk attached to "risk free" or "low risk" lendings. The real value of the money may have changed due to inflation, or, in the case of a foreign investment, due to exchange rate fluctuations.

The Bank for International Settlements is an organisation of central banks that sets rules to define how much capital banks have to hold against the loans they give out.

Ratings and creditworthiness

Specific bond debts owed by both governments and private corporations is rated by rating agencies, such as Moody's, A. M. Best and Standard & Poor's. The government or company itself will also be given its own separate rating. These agencies assess the ability of the debtor to honor his obligations and accordingly give him a credit rating. Moody's uses the letters Aaa Aa A Baa Ba B Caa Ca C, where ratings Aa-Caa are qualified by numbers 1-3. Munich Re, for example, currently is rated Aa3 (as of 2004). S&P and other rating agencies have slightly different systems using capital letters and +/- qualifiers.

A change in ratings can strongly affect a company, since its cost of refinancing depends on its creditworthiness. Bonds below Baa/BBB (Moody's/S&P) are considered junk- or high risk bonds. Their high risk of default (approximately 1.6% for Ba) is compensated by higher interest payments. Bad Debt is a loan that can not (partially or fully) be repaid by the debtor. The debtor is said to default on his debt. These types of debt are frequently repackaged and sold below face value. Buying junk bonds is seen as a risky but potentially profitable form of investment

Cancellation

Short of bankruptcy, it is rare that debts are wholly or partially forgiven. Traditions in some cultures demand that this be done on a regular (often annual) basis, in order to prevent systemic inequities between groups in society, or anyone becoming a specialist in holding debt and coercing repayment. Under English law, when the creditor is deceived into forgoing payment, this is a crime: see Theft Act 1978.

International Third World debt has reached the scale that many economists are convinced that debt cancellation is the only way to restore global equity in relations with the developing nations.

Satisfaction by writeoff

A debt is repaid in full by the lender writing off as a bad debt (for tax purposes) the principal and interest owed(on a debt that is not being paid), leaving no debt remaining on its (the lenders) books.

A simple analogy gives a better understanding-if a stranger comes in and pays off a debt you owe,you no longer owe it, it(your debt)has been paid. And in the tax writeoff example, the lender in writingoff the principal and interest of your debt has been paid 100% of both principal and interest by his tax deduction yielding a tax savings equal to 100% of your debt. And accounting recognizes this by extinguishing your debt in full -no longer permitting that debt to be shown on the lender's books.

Further "transfer" of this already paid debt to a collection agency is simply fraud as no debt remains to be collected upon

Debt & Securitization

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Securitization occurs when a company groups together assets or receivables and sells them in units to the market through a trust. Any asset with a cashflow can be securitized. The cash flows from these receivables are used to pay the holders of these units. Companies often do this in order to remove these assets from their balance sheets and monetize an asset. Although these assets are "removed" from the balance sheet and are supposed to be the responsibility of the trust, that does not end the company's involvement. Often the company maintains a special interest in the trust which is called an "interest only strip" or "first loss piece". Any payments from the trust must be made to regular investors in precedence to this interest. This protects investors from a degree of risk, making the securitization more attractive. The aforementioned brings into question whether the assets are truly off balance sheet given the company's exposure to losses on this interest.

Debt, inflation and the exchange rate

As noted above, debt is normally denominated in a particular monetary currency, and so changes in the valuation of that currency can change the effective size of the debt. This can happen due to inflation or deflation, so it can happen even though the borrower and the lender are using the same currency. Thus it is important to agree on standards of deferred payment in advance, so that a degree of fluctuation will also be agreed as acceptable. It is for instance common to agree to "US dollar denominated" debt.

The form of debt involved in banking accounts for a large proportion of the money in most industrialised nations (see money and credit money for a discussion of this). There is therefore a complex relationship between inflation, deflation, the money supply, and debt. The store of value represented by the entire economy of the industrialized nation itself, and the state's ability to levy tax on it, acts to the foreign holder of debt as a guarantee of repayment, since industrial goods are in high demand in many places worldwide.

Debt & Accounting debt

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In national accounting, debts are added according to those who are indebted. Household debt is the debt held by households. "National" or Public debt is the debt held by the various governmental institutions (federal government, states, cities ...). Business debt is the debt held by businesses. Financial debt is the debt held by the financial sector (from one financial institution to another). Total debt is the sum of all those debts, excluding financial debt to prevent double accounting. These various types of debt can be computed in debt/GDP ratios. Those ratios help to assess the speed of variations in the indebtness and the size of the debt due. For example the USA have a high consumer debt and a low public debt, while in European countries the opposite tends to be true.

There are differences in the accounting of debt for private and public agents. If a private agent promises to pay something later, it has a debt, and this debt is enforceable by public agents. If a public body passes a law stating that it'll pay something later (a kind of promise), it keeps the right to change the law later (and not to pay). This is why for instance the money governments promised to pay for retirements does not show up in the public debt assessment, whereas the money private companies promised to pay for retirements do.

Debt & Payment & Types of debt

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Payment

Before a debt can be, both the debtor and the creditor must agree on the manner in which the debt will be repaid, known as the standard of deferred payment. This payment is usually denominated as a sum of money in units of currency, but can sometimes be denominated in terms of goods. Payment can be made in increments over a period of time, or all at once at the end of the loan agreement.

Types of debt

There are numerous types of debt, including basic loans, syndicated loans, bonds, and promissory notes. Debt, especially large sums of debt, can also be secured through a mortgage or other security interest over some of the debtor's property, in which case the creditor will have some rights over that property in the event that the debtor becomes unable to repay the debt and defaults on the loan.

A basic loan is the simplest form of debt. It consists of an agreement to lend a principal sum for a fixed period of time, to be repaid by a certain date. In commercial loans interest, calculated as a percentage of the principal sum per annum, will also have to be paid by that date.

In some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid; the additional principal has the same economic effect as a higher interest rate (see point (mortgage)).

A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum.

A bond is a debt security issued by certain institutions such as companies and governments. A bond entitles the holder to repayment of the principal sum, plus interest. Bonds are issued to investors in a marketplace when an institution wishes to borrow money. Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30 years, being less common. At the end of the bond's life the money should be repaid in full. Interest may be added to the end payment, or can be paid in regular installments (known as coupons) during the life of the bond. Bonds may be traded in the bond markets, and are widely used as relatively safe investments in comparison to equity.

Debt

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Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.

A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest. Historically, debt was responsible for the creation of indentured servants.

Helmet & Function and structure

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Despite various designs and requirements, helmets attempt to protect the user's head through a mechanical energy-absorption process. Therefore, their structure and protective capacity are altered in high-energy impacts. Beside their energy-absorption capability, their volume and weight are also important issues, since higher volume and weight increase the injury risk for the user's head and neck.

Classical helmets from the ancient Greeks to today treat the head uniformly and are currently tested on rigid headforms. Anatomical helmets adapted to the inner head structure were invented by neurosurgeons at the end of the 20th century. Since the materials are disposed according to the anatomical structure of the head, they are smaller and lighter than the classical helmets.

Types of helmets

Helmets used for different purposes differ greatly in their design. For example, a bicycle helmet would chiefly need to protect against blunt impact forces. A helmet designed for rock climbing, however, would need to protect against objects (e.g. small rocks and climbing equipment) falling from above. Consequently, bicycling and rock climbing helmets little resemble each other. Practical concerns also dictate helmet design: a bicycling helmet would preferably be aerodynamic in shape and probably well ventilated, while a rock climbing helmet would be lightweight and with a minimum of bulk to reduce any detrimental effect on the climber's technique.

Goggles, face guards and ear plugs are other forms of protective headgear. Hard hats are typically preferred in modern times for construction workers. Helmets are often used by riot police.

Sometimes medical conditions need a helmet to be worn to protect the brain because of a gap in the braincase, e.g. because of cleidocranial dysostosis or in separated craniopagus twins.

Helmet & Military origins and symbolism

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Helmets were among the oldest forms of combat protection, and are known to have been worn by ancient Greeks, Romans, throughout the Middle Ages, and up to the end of the 1600s by many combatants. At that time, they were purely military equipment, protecting the head from cutting blows with swords, flying arrows, and low-velocity musketry. Some helmets, in order to protect the neck as well, have a sort of extension made of leather strips called pteruges, particularilly common in the Middle East. They were initially constructed from leather, and then bronze and iron during the Bronze and Iron Ages, but soon came to be made entirely from forged steel in many societies after about 950A.D. Military use of helmets declined after 1670, and rifled firearms ended their use by foot soldiers after 1700. By the 18th century, cavalry units often wore steel body cuirasses, and frequently metal skull protectors under their hats, called "secrets". The Prussian spiked helmet, or Pickelhaube, offered almost no protection from the increased use of heavy artillery during World War I, and in 1916 was replaced by the German steel helmet, or Stahlhelm, and afterwards it was worn merely for tradition.

The Napoleonic era saw ornate cavalry helmets reintroduced for cuirassiers and dragoons in some armies; they continued to be used by French forces during World War I as late as 1915, when they were replaced by the new French Adrian helmet. It was soon followed by the adoption of similar steel helmets by the other warring nations.

World War I and its increased use of heavy artillery had renewed the need for steel helmets, which were quickly introduced by all the combatant nations for their foot soldiers. In the 20th century, such helmets offered protection for the head from shrapnel and spent, or glancing, bullets.

The use of protective helmets by millions of fighting men in the two world wars increased awareness of "hard hat" protection. By the 1950s, hundreds of new applications for helmets were found. The helmet offered an unexpected advantage: Symbolism. It can signify that, like a soldier, the wearer is someone qualified for or capable of a certain task or activity, such as construction, operation of heavy machinery, or participation in certain sports.

Today's militaries often use high-quality helmets made of ballistic materials such as Kevlar, which have excellent bullet and fragmentation stopping power. Some helmets also have good non-ballistic protective qualities, though many do not. Non-ballistic injuries may be caused by many things, including (but not limited to) concussive shockwaves from explosions, motor vehicle accidents, or falls.

Helmet

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his article is about the type of headgear. For the band, see Helmet (band). For other uses, see Helmet (disambiguation).

A female wearing a cycling helmet

A helmet is a form of protective gear worn on the head. Traditionally, helmets have been made of metal. In recent decades helmets made from resin or plastic and typically reinforced with Aramid fiber (e.g. Twaron or Kevlar) have become preferred for most applications. Designed for protection of the head in combat, or in civilian life, from sports injuries, falling objects or high-speed collisions.

Helmets are common in the military, construction, mining, and some sports, including American football, baseball, ski, snowboarding, ice hockey, equestrian sports, motorsports, and rock climbing. Motorcycle helmets and bicycle helmets are compulsory headgear in some jurisdictions; in the United Kingdom only Sikhs are allowed to ride motorcycles without wearing motorcycle helmets. Bicycle helmet compulsion and even strong promotion has been a heated subject of debate amongst cyclists and scientists since at least the 1990s, lately focusing on alleged net protective effect at the population level.

Insurance contract & Parts of an insurance contract

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Parts of an insurance contract

Definitions - define important terms used in the policy language.
Insuring Agreement - describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between insurer and insured. It summarizes the major promises of the insurance company, as well as stating what is covered.
Declarations - identifies who is an insured, the insured's address, the insuring company, what risks or property are covered, the policy limits (amount of insurance), any applicable deductibles, the policy period and premium amount.
Exclusions - take coverage away from the Insuring Agreement by describing property, perils, hazards or losses arising from specific causes which are not covered by the policy.
Conditions - provisions, rules of conduct, duties and obligations required for coverage. If policy conditions are not met, the insurer can deny the claim.

Life insurance specific features

Incontestibility - in the United States, life insurance contracts may not be contested by the insurer at any point after the contract has been in force for two years. The insurer has the burden to investigate fully anything they wish to make sure the insured is an acceptable risk within those two years. Any material mistatements on the insurance application (which generally forms a part of the contract) cannot be used as a reason for the insurer not to pay the death benefit, as long as it does not constitute fraud on the part of the insured. The insurer's only recourse if there is no fraud is they can adjust the death benefit to correct for the correct age or sex of the insured if they are different from what the application noted.

Definitions

insured - the person whom benefits would be paid to, or on the behalf of, if certain defined events occur.

Insurance contract

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An Insurance contract determines the legal framework under which the features of an insurance policy are enforced. Insurance contracts are designed to meet very specific needs and thus have many features not found in many other types of contracts. Many features are similar across a wide variety of different types of insurance policies.

General Features

The insurance contract is a contract whereby the insurer will pay the insured (the person whom benefits would be paid to, or on the behalf of), if certain defined events occur. Subject to the "fortuity principle", the event must be uncertain. The uncertainty can be either as to when the event will happen (i.e. in a life insurance policy, the time of the insured's death is uncertain) or as to if it will happen at all (i.e. a fire insurance policy).

Insurance contracts are generally considered contracts of adhesion because the insurer draws up the contract and the insured has little or no ability to make material changes to it. This is interpreted to mean that the insurer bears the burden if there is any ambiguity in any terms of the contract.

Insurance contracts are aleatory in that the amounts exchanged by the insured and insurer are unequal and depend upon uncertain future events.

Insurance contracts are unilateral, meaning that only the insurer makes legally enforceable promises in the contract. The insured is not required to pay the premiums, but the insurer is required to pay the benefits under the contract if the insured has paid the premiums and met certain other basic provisions.

Insurance contracts are governed by the principle of utmost good faith (uberrima fides) which requires both parties of the insurance contact to deal in good faith and in particular it imparts on the insured a duty to disclose all material facts which relate to the risk to be covered. This contrasts with the legal doctrine that covers most other types of contracts, caveat emptor (let the buyer beware).

Insurance contract

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General Features

Insurance contracts are generally considered contracts of adhesion because the insurer draws up the contract and the insured has little or no ability to make material changes to it. This is interpreted to mean that the insurer bears the burden if there is any ambiguity in any terms of the contract.

Insurance contracts are aleatory in that the amounts exchanged by the insured and insurer are unequal and depend upon uncertain future events.

Insurance contracts are unilateral, meaning that only the insurer makes legally enforceable promises in the contract. The insured is not required to pay the premiums, but the insurer is required to pay the benefits under the contract if the insured has paid the premiums and met certain other basic provisions.

Insurance contracts are governed by the principle of utmost good faith (uberrima fides) which requires both parties of the insurance contact to deal in good faith and in particular it imparts on the insured a duty to disclose all material facts which relate to the risk to be covered. This contrasts with the legal doctrine that covers most other types of contracts, caveat emptor (let the buyer beware).

Insurance & Controversies.. & ..

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The insurance industry and rent seeking

Certain insurance products and practices have been described as rent seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.

Criticism of insurance companies

Some people believe that modern insurance companies are money-making businesses which have little interest in insurance. They argue that the purpose of insurance is to spread risk so the reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs counter to the principle of insurance.

Other criticisms include:

Insurance policies contain too many exclusion clauses. For example, some house insurance policies do not cover damage to garden walls.

Most insurance companies now use call centres and staff attempt to answer questions by reading from a script. It is difficult to speak to anybody with expert knowledge.
Glossary
'Combined ratio' = loss ratio + expense ratio. Loss ratio is calculated by dividing the amount of losses (sometimes including loss adjustment expenses) by the amount of earned premium. Expense ratio is calculated by dividing the amount of operational expenses by the amount of earned premium. A lower number indicates a better return on the amount of capital placed at risk by an insurer.
'URIE' = unincorporated reciprocal inter-insurance exchange.
'SSA' = subscriber savings account.
'AIF' = attorney in fact

Insurance & Controversies.. & Insurance patents

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See insurance patent for more details.

New insurance products can now be protected from copying with a business method patent in the United States.

A recent example of a new insurance product that is patented is telematic auto insurance. It was independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134 ) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009).

The basic idea of telematic auto insurance is that a driver's behavior is monitored directly while he or she drives and the information is transmitted to the insurance company. The insurance company uses the information to assess the likelihood that a driver will have an accident and adjusts premiums accordingly. A driver who drives great distances at high speeds, for example, might be charged a different rate than a driver who drives short distances at low speeds. The precise effect on charges is not known as it is not clear that a high speed long distance driver incurs greater risk to an insurance pool than the slow around-town driver.^{[citation needed]}

A British auto insurance company, Norwich Union, has obtained a license to both the Progressive patent and Perez patent. They have made investments in infrastructure and developed a commercial offering called "Pay As You Drive" or PAYD.

Recent theoretical economic research on the social welfare effects of Progressive's telematics technology business process patents have questioned whether the business process patents are pareto efficient for society. Premliminary results suggest that they are not, but more work is needed. ^[10] ^[11]

Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70 percent of the new U.S. patent applications in this area.

Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp.

There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006

Insurance & Controversies..

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Redlining

Redlining is the practice of denying insurance coverage in specific geographic areas, purportedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.^[9]

In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used.

An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination.

What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large)

Insurance & Controversies.

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Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold.

Many institutional insurance purchasers buy insurance through an insurance broker. Brokers represent the buyer (not the insurance company), and typically counsel the buyer on appropriate coverages, policy limitations. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible.

Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company.

Health insurance

Health insurance, which is coverage for individuals to protect them against medical costs, is a highly charged and political issue in the United States, which does not have socialized health coverage. In theory, the market for health insurance should function in a manner similar to other insurance coverages, but the skyrocketing cost of health coverage has disrupted markets around the globe, but perhaps most glaringly in the U.S. See health insurance.

Dental insurance

Dental insurance, like health insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance.

Insurance & Controversies

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Insurance insulates too much

By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.

For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider were so irrational as to desire to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal

Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts.

In the United Kingdom The Crown (which, for practical purposes, meant the Civil service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether.

Insurance & Financial viability of insurance companies

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Financial stability and strength of an insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.

Insurance & Size of global insurance industry

2007-12-17T08:21:00.004-08:00

Global insurance premiums grew by 9.7 percent in 2004 to reach $3.3 trillion. This follows 11.7 percent growth in the previous year. Life insurance premiums grew by 9.8 percent during the year, thanks to rising demand for annuity and pension products. Non-life insurance premiums grew by 9.4 percent, as premium rates increased. Over the past decade, global insurance premiums rose by more than a half as annual growth fluctuated between 2 percent and 10 percent.^{[citation needed]}

Advanced economies account for the bulk of global insurance. With premium income of $1,217 billion in 2004, North America was the most important region, followed by the EU (at $1,198 billion) and Japan (at $492 billion). The top four countries accounted for nearly two-thirds of premiums in 2004. The United States and Japan alone accounted for a half of world insurance premiums, much higher than their 7 percent share of the global population. Emerging markets accounted for over 85 percent of the world’s population but generated only 10 percent of premiums. The volume of UK insurance business totaled $295 billion in 2004 or 9.1 percent of global premiums

Insurance & Life insurance and saving

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Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. See life insurance.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.

In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.

Insurance & Types of insurance companies

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Insurance companies may be classified as

Life insurance companies, which sell life insurance, annuities and pensions products.
Non-life or general insurance companies, which sell other types of insurance.

General insurance companies can be further divided into these sub categories.

Standard Lines
Excess Lines

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature — coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.

In the United States, standard line insurance companies are your "main stream" insurers. These are the companies that typically insure your auto, home or business. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.

Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they don't have the same regulations as standard insurance companies. State laws generally require insurance placed with surplus line agents and brokers to not be available through standard licensed insurers.

Insurance companies are generally classified as either mutual or stock companies. This is more of a traditional distinction as true mutual companies are becoming rare. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyds organizations.

Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.

Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well.

Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100 percent subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.

The types of risk that a captive can underwrite for their parents include property damage, public and products liability, professional indemnity, employee benefits, employers liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.

Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:

heavy and increasing premium costs in almost every line of coverage;
difficulties in insuring certain types of fortuitous risk;
differential coverage standards in various parts of the world;
rating structures which reflect market trends rather than individual loss experience;
insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies .

Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions.

Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.

Insurance & Types of insurance

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Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which are not.

Below is a (non-exhaustive) list of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner's property.

Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars.
Aviation insurance insures against hull, spares, deductible, hull war and liability risks.
Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.
Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.^[7]
Casualty insurance insures against accidents, not necessarily tied to any specific property.
Credit insurance repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. Mortgage insurance (which see below) is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.
Crime insurance insures the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.
Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."^[8]
Defense Base Act Workers' compensation or DBA Insurance insurance provides coverage for civilian workers hired by the government to perform contracts outside the US and Canada. DBA is required for all US citizens, US residents, US Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.
Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes incurred by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.
Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.
- Total permanent disability insurance insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".
Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.
Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.
Fire insurance: See "Property insurance".
Hazard insurance: See "Property insurance".
Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the UK (NHS) or other publicly-funded health programs do not pay for them. It will often result in quicker health care where better facilities are available.
Kidnap and ransom insurance
Home insurance or homeowners insurance: See "Property insurance".
Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of willful or intentional acts by the insured.
- Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
- Professional liability insurance, also called professional indemnity insurance, protects professional practitioners such as architects, lawyers, doctors, and accountants against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, home inspectors, appraisers, and website developers.
Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
- Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.
Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.
Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
Mortgage insurance insures the lender against default by the borrower.
National Insurance is the UK's version of social insurance (which see below).
No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.
Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. (For the United States, see the Price-Anderson Nuclear Industries Indemnity Act.)
Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.
Political risk insurance can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.
Pollution Insurance. A first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded
Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.
Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.
Protected Self-Insurance is an alternative risk financing mechanism in which an organisation retains the mathematically calculated cost of risk within the organisation and transfers the catastrophic risk with specific and aggregate limits to an Insurer so the maximum total cost of the program is known. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.
Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.
Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium × tax multiplier. Numerous variations of this formula have been developed and are in use.
Formal Self Insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that mandates participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):
- Social welfare provision
- Social security
- Social safety net
- National Insurance
- Social Security (United States)
- Social Security debate (United States)
Stop-loss insurance provides protection against catastrophic or unpredictable losses. It is purchased by organisations who do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles.
Surety Bond insurance is a three party insurance guaranteeing the performance of the principal.
Terrorism insurance provides protection against any loss or damage caused by terrorist activities.
Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.
Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, lost of personal belongings, travel delay, personal liabilities, etc.
Volcano insurance is an insurance that covers volcano damage in Hawaii.
Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expense incurred because of a job-related injury

Insurance & History of insurance

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In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.

Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."[1]

A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes.

The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.

Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses.

In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks.

In the state of New York, which has unique laws in keeping with its stature as a global business centre, former New York Attorney General Eliot Spitzer was in a unique position to grapple with major national insurance brokerages. Spitzer alleged that Marsh & McLennan steered business to insurance carriers based on the amount of contingent commissions that could be extracted from carriers, rather than basing decisions on whether carriers had the best deals for clients. Several of the largest commercial insurance brokerages have since stopped accepting contingent commissions and have adopted new business models.

Insurance & Gambling analogy

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Both gambling and insurance transfer risk and reward.

Gambling transactions offer the possibility of either a loss or a gain. Gambling creates losers and winners. Insurance transactions do not present the possibility of gain. Insurance offers financial support sufficient to replace loss, not to create pure gain.

Gamblers can continue spending, buying more risk than they can afford to pay for. Insurance buyers can only spend up to the limit of what carriers would accept to insure; their loss is limited to the amount of the premium.

Gamblers, by creating new risk transfer, are risk seekers. Insurance buyers are risk avoiders, creating risk transfer in terms of their need to reduce exposure to large losses.

Gambling or gaming is designed at the start so that the odds are not affected by the players' conduct or behavior and not required to conduct risk mitigation practices. But players can prepare and increase their odds of winning in certain games such as poker or blackjack. In contrast to gambling or gaming, to obtain certain types of insurance, such as fire insurance, policyholders can be required to conduct risk mitigation practices, such as installing sprinklers and using fireproof building materials to reduce the odds of loss to fire. In addition, after a proven loss, insurers specialize in providing rehabilitation to minimize the total loss.

Insurance, the avoiding, mitigating and transferring of risk, creates greater predictability for individuals and organizations.

Insurance & Insurer’s business model

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Profit = earned premium + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insureds.

The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are losers (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income).

An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss.

Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out.

In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. ^[6]

Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the US, due to natural catastrophes, have exacerbated this trend.

Finally, claims and loss handling is the materialized utility of insurance. In managing the claims-handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome

Insurance & Risk limiting features

2007-12-17T08:19:00.001-08:00

An insurance policy should not contain provisions that allow one side or the other to unilaterally void the contract in exchange for benefit. Provisions that void the contract for failure to perform or for fraud or material misrepresentation are ordinary and acceptable.

The policy should have a term of not more than about three years. This is not a hard and fast rule. Contracts of over five years duration are classified as ‘long-term,’ which can impact the accounting treatment, and can obviously introduce the possibility that over the entire term of the contract, no actual risk will transfer. The coverage provided by the contract need not cease at the end of the term (e.g., the contract can cover occurrences as opposed to claims made or claims paid).

The contract should be considered to include any other agreements, written or oral, that confer rights, create obligations, or create benefits on the part of either or both parties. Ideally, the contract should contain an ‘Entire Agreement’ clause that assures there are no undisclosed written or oral side agreements that confer rights, create obligations, or create benefits on the part of either or both parties. If such rights, obligations or benefits exist, they must be factored into the tests of reasonableness and significance.

The contract should not contain arbitrary limitations on timing of payments. Provisions that assure both parties of time to properly present and consider claims are acceptable provided they are commercially reasonable and customary.

Provisions that expressly create actual or notional accounts that accrue actual or notional interest suggest that the contract contains, in fact, a deposit.

Provisions for additional or return premium do not, in and of themselves, render a contract something other than insurance. However, it should be unlikely that either a return or additional premium provision be triggered, and neither party should have discretion regarding the timing of such triggering.

All of the events that would give rise to claims under the contract cannot have materialized prior to the inception of the contract. If this "all events" test is not met, then the contract is considered to be a retroactive contract, for which the accounting treatment becomes complex.

Insurance & "Safe harbor" exemptions

2007-12-17T08:18:00.003-08:00

The analysis of reasonableness and significance is an estimate of the probability of different gain or loss outcomes under different loss scenarios. It takes time and resources to perform the analysis, which constitutes a burden without value where risk transfer is reasonably self-evident.

Guidance exists for insurers and reinsurers, whose CEO's and CFO's attest annually as to the reinsurance agreements their firms undertake. The American Academy of Actuaries, for instance, identifies three categories of contract as outside the requirement of attestation:

Inactive contracts. If there are no premiums due nor losses payable, and the insurer is not taking any credit for the reinsurance, determining risk transfer is irrelevant.
Pre-1994 contracts. The attestation requirement only applies to contracts that were entered into, renewed or amended on or after 1 January 1994. Prior contracts need not be analyzed.
Where risk transfer is "reasonably self-evident."

Risk transfer is reasonably self-evident in most traditional per-risk or per-occurrence excess of loss reinsurance contracts. For these contracts, a predetermined amount of premium is paid and the reinsurer assumes nearly all or all of the potential variability in the underlying losses, and it is evident from reading the basic terms of the contract that the reinsurer can incur a significant loss. In many cases, there is no aggregate limit on the reinsurer's loss. The existence of certain experience-based contract terms, such as experience accounts, profit commissions, and additional premiums, generally reduce the amount of risk transfer and make it less likely that risk transfer is reasonably self-evident.

Insurance & Is there a brightline test?

2007-12-17T08:18:00.001-08:00

Neither FAS 113 nor SAP 62 defines the terms reasonable or significant. Ideally, one would like to be able to substitute values for both terms. It would be much simpler if one could apply a test of an X percent chance of a loss of Y percent or greater. Such tests have been proposed, including one famously attributed to an SEC official who is said to have opined in an after lunch talk that a 10 percent chance of a 10 percent loss was sufficient to establish both reasonableness and significance. Indeed, many insurers and reinsurers still apply this 10/10" test as a benchmark for risk transfer testing.

It should be obvious that an attempt to use any numerical rule such as the 10/10 test will quickly run into problems. Implicit in the test is keeping the 10/10 that either are upper bonds for the comment made by the SEC official therefore, the rest of this paragraph doesn't apply. Suppose a contract has a 1 percent chance of a 10,000 percent loss? It should be reasonably self-evident that such a contract is insurance, but it fails one half of the 10/10 test.

It does not appear that any brightline test of reasonableness nor significance can be constructed.

Excess of loss contracts, like those commonly used for umbrella and general liability insurance, or to insure against property losses, will typically have a low ratio of premium paid to maximum loss recoverable. This ratio (expressed as a percentage), commonly called the rate on line for historical reasons related to underwriting practices at Lloyd's of London, will typically be low for contracts that contain reasonably self-evident risk transfer. As the ratio increases to approximate the present value of the limit of coverage, self-evidence decreases and disappears.

Contracts with low rates on line may survive modest features that limit the amount of risk transferred. As rates on line increase, such risk limiting features become increasingly important.

Does the contract contain adequate risk transfer?

2007-12-17T08:17:00.002-08:00

FAS 113 contains two tests, called the '9a and 9b tests,' that collectively require that a contract create a reasonable chance of a significant loss to the underwriter for it to be considered insurance.

9. Indemnification of the ceding enterprise against loss or liability relating to insurance risk in reinsurance of short-duration contracts requires both of the following, unless the condition in paragraph 11 is met:

a. The reinsurer assumes significant insurance risk under the reinsured portions of the underlying insurance contracts.

b. It is reasonably possible that the reinsurer may realize a significant loss from the transaction.

Paragraph 10 of FAS 113 makes clear that the 9a and 9b tests are based on comparing the present value of all costs to the PV of all income streams. FAS gives no guidance on the choice of a discount rate on which to base such a calculation, other than to say that all outcomes tested should use the same rate.

Statement of Statutory Accounting Principles ("SSAP") 62, issued by the National Association of Insurance Commissioners, applies to so-called 'statutory accounting' - the accounting for insurance enterprises to conform with regulation. Paragraph 12 of SSAP 62 is nearly identical to the FAS 113 test, while paragraph 14, which is otherwise very similar to paragraph 10 of FAS 113, additionally contains a justification for the use of a single fixed rate for discounting purposes. The choice of an "reasonable and appropriate" discount rate is left as a matter of judgment.

When is a policy really insurance?

2007-12-17T08:17:00.001-08:00

An operational definition of insurance is that it is

the benefit provided by a particular kind of indemnity contract, called an insurance policy;
that is issued by one of several kinds of legal entities (stock insurance company, mutual insurance company, reciprocal, or Lloyd's syndicate, for example), any of which may be called an insurer;
in which the insurer promises to pay on behalf of or to indemnify another party, called a policyholder or insured;
that protects the insured against loss caused by those perils subject to the indemnity in exchange for consideration known as an insurance premium.

In recent years this kind of operational definition proved inadequate as a result of contracts that had the form but not the substance of insurance. The essence of insurance is the transfer of risk from the insured to one or more insurers. How much risk a contract actually transfers proved to be at the heart of the controversy.

This issue arose most clearly in reinsurance, where the use of Financial Reinsurance to reengineer insurer balance sheets under US GAAP became fashionable during the 1980s. The accounting profession raised serious concerns about the use of reinsurance in which little if any actual risk was transferred, and went on to address the issue in FAS 113, cited above. While on its face, FAS 113 is limited to accounting for reinsurance transactions, the guidance it contains is generally conceded to be equally applicable to US GAAP accounting for insurance transactions executed by commercial enterprises.

Insurance & Indemnification

2007-12-17T08:16:00.004-08:00

The technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of"^[3] policy. The difference is significant on paper, but rarely material in practice.

An "indemnity" policy will not pay claims until the insured has paid out of pocket to some third party; i.e. a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitors fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)^[4].

Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket anything. Most modern liability insurance is written on the basis of "pay on behalf" language^[5].

An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.

Principles of insurance

2007-12-17T08:16:00.003-08:00

Commercially insurable risks typically share seven common characteristics.^[1]

A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.^[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance.
Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market

Insurance

2007-12-17T08:16:00.001-08:00

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

Fixing Cleveland's foreclosure crisis

2007-12-17T08:14:00.001-08:00

Fixing Cleveland's foreclosure crisis

11:49am: Community groups are joining hands with their former foes to help keep the city's residents from losing their homes. (more)

• Where Cleveland went wrong

Federal drug approvals plunge

11:48am: FDA has OK'd 29 percent fewer new drugs this year, despite a strong pipeline of applications from pharmaceutical firms. (more)

Social Security: Collecting early

5:02am: A reader asks Money Magazine's Walter Updegrave if the Social Security taxes he pays count toward the benefits he is already receiving. (more)

6 dynasties that own Manhattan

9:15am: Private equity firms are charging into real estate, but these multigenerational clans still control huge chunks of New York City's iconic skyline. A Fortune photo essay. (more)

Laptop & Security

2007-12-17T08:13:00.001-08:00

Laptops are generally prized targets of theft, and theft of laptops can lead to more serious problems such as identity theft from stolen credit card numbers.^[6] Most laptops have a Kensington security slot to chain the computer to a desk with a third party security cable. In addition to this, modern operating systems and software may have disk encryption functionality that renders the data on the laptop's hard drive unreadable without a key, providing the laptop was not turned on while stolen.

Laptop & Health issues

2007-12-17T08:12:00.003-08:00

A study by State University of New York researchers says heat generated from laptops can significantly elevate the temperature of the scrotum, potentially putting sperm count at risk. The small study, which included little more than two dozen men ages 13 to 35, found that the sitting position required to balance a laptop can raise scrotum temperature by as much as 2.1 °C (3.8 °F). Heat from the laptop itself can raise the temperature by another 0.7 °C (1.4 °F), bringing the potential total increase to 2.8 °C (5.0 °F). However, further research is needed to determine whether this directly affects sterility in men. ^[5] A common practical solution to this problem is to place the laptop on a table or desk.

Because of their small keyboard, the use of laptops can cause RSI, and for this reason laptops have docks that are used with ergonomic keyboards to prevent injury. Some health standards require that ergonomic keyboards be used in workplaces.

Laptop & Performance

2007-12-17T08:12:00.001-08:00

For a given price range (and manufacturing base), laptop computational power has traditionally trailed that of desktops. This is partly due to most laptops sharing RAM between the program memory and the graphics adapter. By virtue of their usage goals, laptops prioritize energy efficiency and compactness over absolute performance. Desktop computers and their modular components are built to fit much bigger standard enclosures, along with the expectation of AC line power. As such, energy efficiency and portability for desktops are secondary design goals compared to absolute performance.

For typical home (personal use) applications, where the computer spends the majority of its time sitting idle for the next user input, laptops of the thin-client type or larger are generally fast enough to achieve the required performance. 3D gaming, multimedia (video) encoding and playback, and analysis-packages (database, math, engineering, financial, etc.) are areas where desktops still offer the casual user a compelling advantage.

With the advent of dual-core processors and perpendicular recording, laptops are beginning to close the performance gap with PCs. Intel's Core 2 line of processors is efficient enough to be used in portable computers, and many manufacturers such as Apple and Dell are building Core 2 based laptops. Also, many high end laptop computers feature mobility versions of graphics cards, eliminating the performance losses associated with integrated graphics.

Laptop & Upgradeability

2007-12-17T08:11:00.002-08:00

Laptops' upgradeability is severely limited, both for technical and economic reasons. As of 2006, there is no industry-wide standard form factor for laptops. Each major laptop vendor pursues its own proprietary design and construction, with the result that laptops are difficult to upgrade and exhibit high repair costs. With few exceptions, laptop components can rarely be swapped between laptops of competing manufacturers, or even between laptops from the different product-lines of the same manufacturer. Standard feature peripherals (such as audio, video, USB, 1394, WiFi, Bluetooth) are generally integrated on the main PCB (motherboard), and thus upgrades often require using external ports, card slots, or wireless peripherals. Other components, such as RAM modules, hard drives, and batteries are typically user-upgradeable.

Many laptops have removable CPUs, although support for other CPUs is restricted to the specific models supported by the laptop motherboard. The socketed CPUs are perhaps for the manufacturer's convenience, rather than the end-user, as few manufacturers try new CPUs in last year's laptop model with an eye toward selling upgrades rather than new laptops. In many other laptops, the CPU is soldered and non-replaceable. ^[4]

Many laptops also include an internal MiniPCI slot, often occupied by a WiFi or Bluetooth card, but as with the CPU, the internal slot is often restricted in the range of cards that can be installed. The widespread adoption of USB mitigates I/O connectivity to a great degree, although the user must carry the USB peripheral as a separate item.

NVidia and ATI have proposed a standardized interface for laptop GPU upgrades (such as an MXM), but again, choices are limited compared to the desktop PCIe/AGP after-market.

On January 2007, Asus announced XG Station external video card for laptops. XG Station is connected to the laptops using USB-2 and Express card interface.

On February 2007, there is a new standard for external PCI Express cable and connector. Future laptops can be expanded using external PCI Express backplane and chassis.

Laptop & Disadvantages

2007-12-17T08:11:00.001-08:00

Standardization issues

While there are accepted world standards of form factors for all the peripherals and add-in PC cards used in the desktop computers, there are still no firm worldwide standards relating to today's laptops' form factors internally, such as supply of electric voltage, motherboard layouts, internal adapters used in connecting the hard disk, optical drive, LCD cable, keyboard and floppy drive to the main board. Most affected by this are users uneducated in the relevant fields, especially if they attempt to connect their laptops with incompatible hardware or power adapters.

Laptops are more complex than simple-to-use consumer electronics. A large number of different parts with similar functions may cause some difficulties to repair technicians, as they have to familiarize themselves with different sets of hardware, but this is part of the job in a specialized trade.

Compatibility issues

Any current compatibility problems in the laptop trade are reflective of the early era of personal computers, when there were many different manufacturers, each and every one of them having their own systems and incompatibility was more a norm.

Some mostly internal or proprietary parts made by laptop producers aren't interchangeable with other manufacturers' products, so that the same manufacturer's components are used with the laptop they produced. Some of the reasons for this are to ensure product stability, prolong product lifetime, to avoid dubious warranty issues and to protect computer beginners from harming their machines.

A significant point to note is that the vast majority of laptops on the market are manufactured by a small handful of ODMs.^[3] The ODM matters more than the OEM. Major relationships include:

Quanta sells to (among others) HP/Compaq, Dell, Toshiba, Sony, Fujitsu, Acer, NEC, Gateway and IBM - note that Quanta is currently (as of August, 2007) the largest manufacturer of notebook computers in the world
Compal sells to Toshiba, HP/Compaq, Acer, and Dell
Wistron sells to HP/Compaq, Dell, IBM, NEC, and Acer
Arima sells to HP/Compaq, NEC, and Dell
Uniwill/ECS sells to IBM, Fujitsu, and Dell
Asus sells to Apple (iBook), Sony, and Samsung
Inventec sells to HP/Compaq, Toshiba, and BenQ

To compensate, some manufacturers have and have had product lines where they have refrained from including some internal hardware in their products by adding in the number of standard hardware outlets and ports, thereby letting users choose their own hardware that they can connect.

In terms of hardware components standardization, PCMCIA/CardBus has proved to be a rather enduring standard. Older laptops lacking a USB port can have a PCMCIA USB/FireWire adapter plugged in. Modern adapters have two to four USB ports or they can be USB/Firewire combo adapters. Thus, such compatibility problems with getting hardware and peripherals connected has nowadays become a non-issue.

Laptop & Parts

2007-12-17T08:10:00.001-08:00

Most modern laptops feature 12 inch (30 cm) or larger active matrix displays with resolutions of 1024×768 pixels and above, and have a PC Card (formerly PCMCIA) or ExpressCard expansion bay for expansion cards. Internal hard disks are physically smaller—2.5 inch (60 mm)—compared to the standard desktop 3.5 inch (90 mm) drive, and usually have lower performance and power consumption. Video and sound chips are usually integrated. This tends to limit the use of laptops for gaming and entertainment, two fields which have constantly escalating hardware demands.^{[citation needed]} However, higher end laptops can come with dedicated graphics processors, such as the Dell Inspiron E1505 and E1705, which can be bought with an ATI Mobility Radeon X1300 or similar. These mobile graphics processors tend to have less performance than their desktop counterparts, but this is because they have been optimized for lower power usage.
There is a wide range of laptop specific processors available from Intel (Pentium M, Celeron, Intel Core and Intel Core 2) and from AMD (Athlon, Turion 64, and Sempron) and also from VIA (C3 and C7-M). Motorola and IBM developed and manufactured the chips for the former PowerPC-based Apple laptops (iBook and PowerBook). Generally, laptop processors are less powerful than their desktop counterparts, due to the need to save energy and reduce heat dissipation. However, the PowerPC G3 and G4 processor generations were able to offer almost the same performance as their desktop versions, limited mostly by other factors, such as the system bus bandwidth; recently, though, with the introduction of the G5s, they have been far outstripped. At one point, the Pismo G3, at up to 500 MHz, was faster than the fastest desktop G3 (then the B&W G3), which ran at 450 MHz.

Some parts for a modern laptop have no corresponding part in a desktop computer:

Current models use lithium ion and more recently lithium polymer batteries, which have largely replaced the older nickel metal-hydride technology. Typical battery life for most laptops is two to five hours with light-duty use, but may drop to as little as one hour with intensive use. Batteries gradually deteriorate over time and eventually need to be replaced in one to five years, depending on the charging and discharging pattern.
Docking stations became common laptop accessories in the early 1990s. They typically were quite large and offered 3.5" and 5.25" storage bays, one to three expansion slots (typically AT style), and a host of connectors. The mating between the laptop and docking station was typically through a large, high-speed, proprietary connector. The most common use was in a corporate computing environment where the company had standardized on a common network card and this same card was placed into the docking station. These stations were very large and quite expensive. As the need to additional storage and expansion slots became less critical because of the high integration inside the laptop itself, the emergence of the Port Replicator as a major accessory commenced. The Port Replicator was often a passive device that simply mated to the connectors on the back of the notebook and allowed the user to quickly connect their laptop so VGA, PS/2, RS-232, etc. devices were instantly attached. As higher speed ports like USB and Firewire became commonplace, the Port Replication was accomplished by a small cable connected to one of the USB 2.0 or FireWire ports on the notebooks. Wireless Port Replicators followed.
Virtually all laptops can be powered from an external AC converter. This device typically adds half a kilogram (1 lb) to the overall "transport weight" of the equipment.
A pointing stick or touchpad is used to control the position of the cursor on the screen. The pointing stick is usually a rubber dot that is located between the G, H and B keys on the laptop keyboard. To navigate the cursor, pressure is applied in the direction intended to move. The touchpad is touch-sensitive and the cursor can be navigated by moving the finger on the pad.

Intel, Asus, Compal, Quanta and other laptop manufacturers have created Common Building Block standard for laptop parts.

2007-12-17T08:09:00.004-08:00

As technology improved during the 1990s, the usefulness and popularity of laptops increased. Correspondingly prices went down. Several developments specific to laptops were quickly implemented, improving usability and performance. Among them were:

Improved battery technology. The heavy lead-acid batteries were replaced with lighter and more efficient technologies, first nickel cadmium or NiCD, then nickel metal hydride (NiMH) and then lithium ion battery and lithium polymer.

Power-saving processors. While laptops in 1991 were limited to the 80286 processor because of the energy demands of the more powerful 80386, the introduction of the Intel 386SL processor, designed for the specific power needs of laptops, marked the point at which laptop needs were included in CPU design. The 386SL integrated a 386SX core with a memory controller and this was paired with an I/O chip to create the SL chipset. It was more integrated than any previous solution although its cost was higher. It was heavily adopted by the major notebook brands of the time. Intel followed this with the 486SL chipset which used the same architecture. However, Intel had to abandon this design approach as it introduced its Pentium series. Early versions of the mobile Pentium required TAB mounting (also used in LCD manufacturing) and this initially limited the number of companies capable of supplying notebooks. However, Intel did eventually migrate to more standard chip packaging. One limitation of notebooks has always been the difficulty in upgrading the processor which is a common attribute of desktops. Intel did try to solve this problem with the introduction of the MMC for mobile computing. The MMC was a standard module upon which the CPU and external cache memory could sit. It gave the notebook buyer the potential to upgrade his CPU at a later date, eased the manufacturing process somewhat, and was also used in some cases to skirt U.S. import duties as the CPU could be added to the chassis after it arrived in the U.S. Intel stuck with MMC for a few generations but ultimately could not maintain the appropriate speed and data integrity to the memory subsystem through the MMC connector.

Improved liquid crystal displays, in particular active-matrix TFT (Thin-Film Transistor) LCD technology. Early laptop screens were black and white, blue and white, or grayscale, STN (Super Twist Nematic) passive-matrix LCDs prone to heavy shadows, ghosting and blurry movement (some portable computer screens were sharper monochrome plasma displays, but these drew too much current to be powered by batteries). Color STN screens were used for some time although their viewing quality was poor. By about 1991, two new color LCD technologies hit the mainstream market in a big way; Dual STN and TFT. The Dual STN screens solved many of the viewing problems of STN at a very affordable price and the TFT screens offered excellent viewing quality although initially at a steep price. DSTN continued to offer a significant cost advantage over TFT until the mid-90s before the cost delta dropped to the point that DSTN was no longer used in notebooks. Improvements in production technology meant displays became larger, sharper, had higher native resolutions, faster response time and could display color with great accuracy, making them an acceptable substitute for a traditional CRT monitor.

Improved storage technology. Early laptops and portables had only floppy disk drives. As thin, high-capacity hard disk drives with higher reliability and shock resistance and lower power consumption became available, users could store their work on laptop computers and take it with them. The 3.5" HDD was created initially as a response to the needs of notebook designers that needed smaller, lower power consumption products. With continuing pressure to shrink the notebook size even further, the 2.5" HDD was introduced. One Laptop Per Child (OLPC) and other new laptops use Flash (non volatile, non mechanical memory device) instead of the mechanical hard disk.

Improved connectivity. Internal modems and standard serial, parallel, and PS/2 ports on IBM PC-compatible laptops made it easier to work away from home; the addition of network adapters and, from 1997, USB, as well as, from 1999, Wi-Fi, made laptops as easy to use with peripherals as a desktop computer. Several laptops also have built in 3 Gbit/s Broadband wireless modem.

Other peripherals such as video camera and fingerprint sensor.

Laptop & History..

2007-12-17T08:09:00.003-08:00

By the end of the 1980s, laptop computers were becoming popular among business people. The NEC UltraLite, released in mid-1989, was perhaps the first notebook computer, weighing just over 2 kg; in lieu of a floppy or hard drive, it contained a 2 mebibyte RAM drive, but this reduced its utility as well as its size. The first notebook computers to include hard drives were those of the Compaq LTE series, introduced toward the end of that year. Truly the size of a notebook, they also featured grayscale backlit displays with CGA resolution.

The first Apple Computer machine designed to be used on the go was the 1989 Macintosh Portable (although an LCD screen had been an option for the transportable Apple IIc in 1984). Actually a "luggable", the Mac Portable was praised for its clear active matrix display and long battery life, but was a poor seller due to its bulk. In the absence of a true Apple laptop, several compatible machines such as the Outbound Laptop were available for Mac users; however, for copyright reasons, the user had to supply a set of Mac ROMs, which usually meant having to buy a new or used Macintosh as well.

The Apple PowerBook series, introduced in October 1991, pioneered changes that are now de facto standards on laptops, such as the placement of the keyboard, room for palm rest, and the inclusion of a built-in pointing device (a trackball). The following year, IBM released its ThinkPad 700C, featuring a similar design (though with a distinctive red TrackPoint pointing device).

Later PowerBooks introduced the first 256-color displays (PowerBook 165c, 1993), and first true touchpad, first 16-bit sound recording, and first built-in Ethernet network adapter (PowerBook 500, 1994).

In 1994, IBM released RS/6000 N40 PowerPC laptop running AIX (Operating system based on UNIX), manufactured by Tadpole. Tadpole also manufactured laptops based on SPARC and DEC Alpha CPUs.

1998 was a significant turning point in the history of notebook computing. That year Microsoft introduced Windows 98. It was the first time that Microsoft had placed much of the power management control in the operating system. Prior to this point each brand used custom BIOS, drivers and in some cases, ASICs, to optimize the battery life of its machines. This move by Microsoft was controversial in the eyes of notebook designers because it greatly reduced their ability to innovate; however, it did serve its role in simplifying and stabilizing certain aspects of notebook design.

The Gateway Solo was the first notebook introduced with a Pentium processor and a CD-ROM. By also featuring a removable hard disk drive and floppy drive it was the first three-spindle (optical, floppy, and hard disk drive) notebook computer. The Gateway Solo was extremely successful within the consumer segment of the market. In roughly the same time period the Dell Latitude, Toshiba Satellite, and IBM ThinkPad were reaching great success with Pentium-based two-spindle (hard disk and floppy disk drive) systems directed toward the corporate market.

Laptop & History.

2007-12-17T08:09:00.001-08:00

The first laptops successful on a large scale came in large part due to a Request For Proposal (RFP) by the U.S. Air Force in 1987. This contract would eventually lead to the purchase of over 200,000 laptops. Competition to supply this contract was fiercely contested and the major PC companies of the time; IBM, Toshiba, Compaq, NEC, and Zenith Data Systems (ZDS), rushed to develop laptops in an attempt to win this deal. ZDS, which had earlier won a landmark deal with the IRS for its Z-171, was awarded this contract for its SupersPort series. The SupersPort series was originally launched with an Intel 8086 processor, dual floppy disk drives, a backlit, blue and white STN LCD screen, and a NiCD battery pack. Later models featured an Intel 80286 processor and a 20 MB hard disk drive. On the strength of this deal, ZDS became the world's largest laptop supplier in 1987 and 1988. ZDS partnered with Tottori Sanyo in the design and manufacturing of these laptops. This relationship is notable because it was the first deal between a major brand and an Asian original equipment manufacturer.

Another notable computer was the Cambridge Z88, designed by Clive Sinclair, introduced in 1988. About the size of an A4 sheet of paper as well, it ran on standard batteries, and contained basic spreadsheet, word processing, and communications programs. It anticipated the future miniaturization of the portable computer; and, as a ROM-based machine with a small display, can—like the TRS-80 Model 100—also be seen as a forerunner of the personal digital assistant.

Laptop & History

2007-12-17T08:08:00.001-08:00

Before laptop/notebook computers were technically feasible, similar ideas had been proposed, most notably Alan Kay's Dynabook concept, developed at Xerox PARC in the early 1970s.

The first commercially available portable computer was the Osborne 1 in 1981, which used the CP/M operating system. Although it was large and heavy compared to today's laptops, with a tiny CRT monitor, it had a near-revolutionary impact on business, as professionals were able to take their computer and data with them for the first time. This and other "luggables" were inspired by what was probably the first portable computer, the Xerox NoteTaker, again developed at Xerox PARC, in 1976; however, only ten prototypes were built. The Osborne was about the size of a portable sewing machine, and importantly could be carried on a commercial aircraft. However, it was not possible to run the Osborne on batteries: it had to be plugged into mains.

In 1982 Kaypro introduced the Kaypro II, a CP/M-based competitor to the Osborne 1. The Kaypro II featured a display nearly twice as big as the Osborne's and double-sided floppy drives with twice the storage capacity.

A more enduring success was the Compaq Portable, the first product from Compaq, introduced in 1983, by which time the IBM Personal Computer had become the standard platform. Although scarcely more portable than the Osborne machines, and also requiring AC power to run, it ran MS-DOS and was the first true IBM clone (IBM's own later Portable Computer, which arrived in 1984, was notably less IBM PC-compatible than the Compaq^{[citation needed]}).

Another significant machine announced in 1981, although first sold widely in 1983, was the Epson HX-20. A simple handheld computer, it featured a full-transit 68-key keyboard, rechargeable nickel-cadmium batteries, a small (120 x 32-pixel) dot-matrix LCD display with 4 lines of text, 20 characters per line text mode, a 24 column dot matrix printer, a Microsoft BASIC interpreter, and 16 KB of RAM (expandable to 32 KB).

However, arguably the first true laptop was the GRiD Compass 1101, designed by Bill Moggridge in 1979-1980, and released in 1982. Enclosed in a magnesium case, it introduced the now familiar clamshell design, in which the flat display folded shut against the keyboard. The computer could be run from batteries, and was equipped with a 320×200-pixel plasma display and 384 kibibyte bubble memory. It was not IBM-compatible, and its high price (US$8,000–10,000) limited it to specialized applications. However, it was used heavily by the U.S. military, and by NASA on the Space Shuttle during the 1980s. The GRiD's manufacturer subsequently earned significant returns on its patent rights as its innovations became commonplace. GRiD Systems Corp. was later bought by Tandy (RadioShack).

Two other noteworthy early laptops were the Sharp PC-5000 and the Gavilan SC, announced in 1983 but first sold in 1984. The Gavilan was notably the first computer to be marketed as a "laptop". It was also equipped with a pioneering touchpad-like pointing device, installed on a panel above the keyboard. Like the GRiD Compass, the Gavilan and the Sharp were housed in clamshell cases, but they were partly IBM-compatible, although primarily running their own system software. Both had LCD displays, and could connect to optional external printers. The Dulmont Magnum, launched internationally in 1984, was an Australian portable similar in layout to the Gavilan, which used the Intel 80186 processor.^[1]

The year 1983 also saw the launch of what was probably the biggest-selling early laptop, the Kyocera Kyotronic 85, which owed much to the design of the previous Epson HX-20. Although it was at first a slow seller in Japan, it was quickly licensed by Tandy Corporation, Olivetti, and NEC, which saw its potential and marketed it respectively as TRS-80 Model 100 line (or Tandy 100), Olivetti M-10, NEC PC-8201.^[2] The machines ran on standard AA batteries. The Tandy's built-in programs, including a BASIC interpreter, a text editor, and a terminal program, were supplied by Microsoft, and are thought to have been written in part by Bill Gates himself. The computer was not a clamshell, but provided a tiltable 8×40-character LCD screen above a full-travel keyboard. With its internal modem, it was a highly portable communications terminal. Due to its portability, good battery life (and ease of replacement), reliability (it had no moving parts), and low price (as little as US$300), the model was highly regarded, becoming a favorite among journalists. It weighed less than 2 kg with dimensions of 30×21.5×4.5 centimeters (12×8½×1¾ in). Initial specifications included 8 kilobytes of RAM (expandable to 24 KB) and a 3 MHz processor. The machine was in fact about the size of a paper notebook, but the term had yet to come into use and it was generally described as a "portable" computer.

Possibly the first commercial IBM-compatible laptop was the Kaypro 2000, introduced in 1985. With its brushed aluminum clamshell case, it was remarkably similar in design to modern laptops. It featured a 25 line by 80 character LCD display, a detachable keyboard, and a pop-up 90 mm (3.5 inch) floppy drive.

Also among the first commercial IBM-compatible laptops were the IBM PC Convertible, introduced in 1986, and two Toshiba models, the T1000 and T1200, introduced in 1987. Although limited floppy-based DOS machines, with the operating system stored in read-only memory, the Toshiba models were small and light enough to be carried in a backpack, and could be run off lead-acid batteries. These also introduced the now-standard "resume" feature to DOS-based machines: the computer could be paused between sessions, without having to be restarted each time.

Laptop & Categories

2007-12-17T08:07:00.002-08:00

Terms sometimes used for subtypes of laptop computers include:

UMPCs: These Ultra-Mobile PCs are mobile computers with a size comparable to PDAs - they are extremely portable. They are now officially called notebooks as the term lap- top insinuated the laptop should be used on the lap, this however caused the hard drive to over heat thus in turn can seriously damage the computer. Because of their small size, they incorporate a 20 cm (7 inch) or smaller touch-screen for the user to interact with it (as with a virtual keyboard), though some are designed with a miniature physical keyboard (a thumbboard) and mouse interface. They house lower performing, power-saving components (in comparison to larger laptops).

Ultraportables: Laptops with screens typically less than 12 inches (30 cm) diagonally and a weight of less than 3 to 5 lb (1.4–2.3 kg). Their keyboards are usually not full-size. Their primary audience is usually business travelers, who need small, light laptops. Ultraportables are often very expensive, have extended battery life, house power-saving CPUs and almost always have integrated graphics.

Thin-and-lights: Laptops usually weighing in between 4 and 6 lb (1.8–2.7 kg) with a screen size of between 12 and 14 inches (30–35 cm) diagonally.

Mainstream: Laptops weighing in between 5 and 7 lb (2.3–3.2 kg), with a screen size of 14.1 inches and 15.4 inches (35 and 39 cm).

Desktop replacement computers: Powerful laptops meant to be mainly used in a fixed location and infrequently carried out due to their weight and size; the latter provides more space for powerful components and a big screen, usually measuring 17–20 inches (43–51 cm). Desktop replacements tend to have limited battery life, rarely exceeding three hours, because the hardware is not optimized for efficient power usage. Sometimes called a luggable laptop. An example of a desktop replacement computers are gaming notebooks, which are designed to handle 3D graphic-intensive processing for gamers.

[edit] Related devices

Laptops can be understood as a particular point on the continuum of more or less portable computing devices: the point at which the device is large enough to use substantially the same software as a desktop machine, but small enough to support mobile computing. Other points on the continuum include:

Transportable, also called portable computers: Computers which can easily be moved from place to place, but cannot be used while in transit, usually because they require AC power. The most famous example is the Osborne 1. A transportable, like a laptop, can run desktop software; but it does not support mobile computing.

Tablets: Computers shaped like slates or (paper) notebooks, with touchscreen interfaces include a magnetized stylus and software for allowing input to be recognized by the touch screen. As of 2007, the most common subcategory is the Tablet PC, which is essentially a laptop with a touchscreen. Some tablets have no keyboard; others, called "convertibles", have a screen which can be rotated 180 degrees and folded on top of the keyboard. Tablets may have limited functionality in certain applications that require an actual physical keyboard for typing, but are otherwise capable of carrying out most tasks that an ordinary laptop would be able to perform.

Internet tablets: Internet appliances in tablet form. An internet tablet supports mobile computing. Internet tablets usually use Linux and they are able to run some applications, but they cant replace a computer. Internet tablets feature MP3, video, internet browser, chat, and picture viewer.

Personal digital assistants (PDAs): Small computers, usually pocket-sized, usually with limited functionality. A PDA supports mobile computing, but almost never runs any desktop software.

Handheld computers: A high-end PDA or small tablet.

Smart phone: A hand held or PDA with an integrated cellphone.

Boundaries that separate these categories are blurry at times. For example, the OQO UPC is a PDA-sized tablet PC; the Apple eMate had the clamshell form factor of a laptop, but ran PDA software. The HP Omnibook line of laptops included some devices small enough to be called handheld computers. The hardware of the Nokia 770 internet tablet is essentially the same as that of a PDA such as the Zaurus 6000; the only reason it's not called a PDA is that it doesn't have PIM software. On the other hand, both the 770 and the Zaurus can run some desktop Linux software, usually with modifications.

Laptop

2007-12-17T08:07:00.001-08:00

A laptop computer, or simply laptop (also notebook computer or notebook), is a small mobile computer, which usually weighs 2-18 pounds (around 1 to 8 kilograms), depending on size, materials, and other factors.

Laptops usually run on a single main battery or from an external AC/DC adapter which can charge the battery while also supplying power to the computer itself. Many computers also have a 3 volt cell to run the clock and other processes in the event of a power failure.

As Personal computers, laptops are capable of the same tasks as a desktop computer, although they are typically less powerful for the same price. They contain components that are similar to their desktop counterparts and perform the same functions, but are miniaturized and optimized for mobile use and efficient power consumption. Laptops usually have liquid crystal displays and most of them use different memory modules for their random access memory (RAM), for instance, SO-DIMM in lieu of the larger DIMMs. In addition to a built-in keyboard, they may utilize a touchpad (also known as a trackpad) or a pointing stick for input, though an external keyboard or mouse can usually be attached.

Judy Mikels VS Jim Dantona late breaking news.

2007-12-17T08:06:00.000-08:00

How is the other investigation into the membership communications of the Ventura County Republican Central Committee coming along? Did the DA formally pass on it? Where in the review process is it? Have all complaints been dropped?

Either way, keep the documents coming into me.

County ethics panel fines GOP group for late reporting of ad

By Kathleen Wilson
Saturday, April 21, 2007

The late reporting of an advertisement criticizing the time former Supervisor Judy Mikels spent at a second home in Tucson has drawn the first fine issued by the county Campaign Finance Ethics Commission in its four years of existence.

In a unanimous vote Friday, the panel assessed a $1,354 fine against an independent committee called Republicans for Ethical Government. The penalty stemmed from late reporting of the ad published during the heated primary campaign last year for the Simi Valley-Moorpark seat on the Board of Supervisors.

The purchase in May 2006 should have been reported to the county elections office along with a copy of the ad within 24 hours, officials said. A required form was not completed until Aug. 22, according to elections officials, who filed a complaint against the committee.

Published in the Simi Valley edition of the Star, the ad cost the same amount as the fine: $1,354. Kenneth Hardy, the Los Angeles attorney who investigated whether the committee had violated Ventura County's campaign finance ordinance, told the commission that was a fair penalty.

related linksSTORY TOOLS

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related linksMore from County News

* Dearth of nurses worsens
* Democrats exploring ways to reach faithful
* Wet day is mostly welcome, but it's ... just a drop in the bucket

He said the violation was serious because it stemmed from what he called an "attack ad," but that the committee did not fail to report out of malice. The maximum penalty was $5,000, according to Hardy's report.

The committee has agreed that it violated the ordinance, he said, and is not planning an appeal.

Jim Dantona, one of Mikels' opponents, claimed repeatedly during the campaign that the three-term incumbent was spending too much time in Tucson to do a good job.

At a news conference called at her Simi Valley home, Mikels told reporters that was "a bald-faced lie."

Two weeks later, the ad ran. It consisted of a letter from Mikels' former aide supporting Dantona's claims.

"Judy, you sure know how to tell a bald-faced lie," wrote the former aide, Jason Oliver.

Oliver said Friday that he was not a member of the committee but did not dispute the fine.

"If they didn't do what they were supposed to do, the decision was the valid and correct decision," he said.

Barbra Williamson, a supporter of Dantona who placed the ad, considered the fine "nitpicking."

The reporting rules are unclear and were poorly explained by elections officials, the Simi Valley councilwoman said.

"Obviously we are going to pay the fine, but you know what, I think the system stinks," she said. "The people who run it don't have a clue until after the damage is done. We would play by the rules if we knew how to find the rules."

Independent expenditures are supposed to be made without knowledge or control of the candidate. Dantona said Friday he had no knowledge of the ad before it appeared but that he was disappointed with the fine.

"It seems like an awfully heavy fine for a clerical mistake or a misunderstanding," he said. Mikels, who left office in January, could not be reached Friday.

Dantona, a Democrat, said he will be interested to see what the commission does about the late contributions filed by the county Republican Central Committee. Documents showed contributions of almost $30,000 the day before the November election. A subsequent report showed about half of the money was for Peter Foy, a Republican who defeated Dantona in the general election to win the 4th District seat.

Republican officials say the expenses were for mailings to party members and completely legal.

Del Tompkins, an aide to the commission, said that complaint is still being investigated. It was filed in November, long after the complaint about the anti-Mikels ad, she said.

The commission dismissed three other complaints Friday, including one filed by Supervisor Linda Parks' opponent in the June primary. Candidate Joe Gibson complained that a political ally of Parks, Louis Masry, may have exceeded the $600 contribution limit when he placed a newspaper ad supporting her.

But the commission found the ad was an independent expenditure made without the knowledge of Parks or her campaign committee, thus exempting it from the $600 limit.

Faith and Government

2007-12-17T08:05:00.000-08:00

Interesting story about local Democrats looking to make in roads with religious voters.

I think this county is headed for a complete Democratic take over. Democrats already control the Board of Supervisors 3-2 ( with one liberal R) and I believe they have more mayors too ( any easy way to fact check this?). The state senate next year for East County might even be in play. Add to that an aggressive drive to undermine the GOP base and if we see another perfect storm on the national scale the Democrats locally will make strong gains if they make long term plans now.

Thoughts?

Democrats exploring ways to reach faithful

By Tom Kisken
tkisken@VenturaCountyStar.com
Saturday, April 21, 2007

Democrats in Ventura County are coming together to talk about connections between politics, faith-based values and morality.

That's right, Democrats.

As part of a ramped-up effort to reach into territory once all but conceded to the GOP, members of the Ojai Valley Democratic Club will meet today to explore ways of reaching out to Jews, Muslims, Christians and others. A week ago, Democrats and faith leaders had a similar conversation in Thousand Oaks.

"The right wing has sort of hijacked Jesus," said Sue Broidy, president of the Ojai club. "This is a chance to remind people that the Democratic Party has traditionally represented the New Testament values of freedom and justice for all."

The California Democratic Party is one of the few state Democratic organizations in the nation to employ a full-time interfaith outreach director. That faith liaison, Jerl Laws, has been on the job about a year, journeying around the state to lead roundtable discussions and Religion 101 workshops that party leaders say are intended to level the playing field.

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* Dearth of nurses worsens
* Wet day is mostly welcome, but it's ... just a drop in the bucket
* County ethics panel fines GOP group for late reporting of ad

"We haven't done a good job. It's because we haven't been out there educating people on where we stand," said former state Sen. Art Torres, chairman of the California Democratic Party. He added that the goal is to show people there is more than one way to think about faith values. "We don't believe God is a Republican, Democrat or a Green Party member."

Expanding discussion on faith

Some Democrats argue too much of the political debate on morality and faith focuses on a handful of red-ember issues such as abortion and gay marriage. They want to expand the discussion to include the war in Iraq, global warming and the uninsured. Some leaders argue even the federal budget should be seen as a moral issue.

Similar discussions are going on throughout the nation, at least in part because of the belief that the faith vote four years ago helped deliver the presidential election to George Bush. Diane Winston, a USC scholar interested in connections between faith and politics, said Democrats believe they can make inroads into Catholic and evangelical communities that are making priorities of environment and poverty.

But while some Republicans focus on very conservative Christian communities, the challenge for Democrats is figuring out how to talk to a diverse array of faith groups without overdoing it.

"It's going to be a delicate balancing act because Americans seem a little bit fatigued with religion," said Winston. "It's kind of a Catch-22. People want their leaders to speak in religious language, but they don't want too much religion in actual policymaking."

What some people want is less campaigning about morality and more action.

"I want politicians to function above any one religion but to reflect the values of all religions," said Rabbi Lisa Hochberg-Miller of Temple Beth Torah in Ventura. "I don't think we see that at all."

The Rev. Rob McCoy is pastor of a conservative Christian congregation in Thousand Oaks who often talks about government from the pulpit and invites faith-driven politicians to talk to his congregation. He, too, feels disillusioned.

"You know when you're being played," he said. "Whenever you look at the church as a voting bloc and you're trying to garner or muster votes by saying the right thing to those people, then you do not understand the church in America."

Faithful looking for consistency

Republican political consultant Wayne Johnson of Sacramento argues people in his party sometimes fixate on just the litmus test issues. They believe they'll gain and hold religious support just by mentioning issues like abortion and same-sex marriage.

Faith conservatives want certain stances on those issues, but they also want a consistent approach to anything that addresses the family, Johnson said.

As far as the Democrats, the party should strive for the days when it symbolized morality for many people. But some politicians may have to change their beliefs to renew that connection, Johnson said.

"When the Democratic Party in the 1950s and '60s embraced the civil-rights movement, it was good for the party and it was good for the country," he said. "But you can't replace racial equality as an issue with making the world safe for partial-birth abortion and expect to maintain the moral high ground."

Democrats emphasize they're not trying to advocate the beliefs of one religious group but rather to explore the moral and spiritual implications of environmental stewardship and foreign policy.

They say they want to acknowledge that religion is as important to their party members as to anyone else.

When Law first started as the party's interfaith director, he told people his job was to talk in public about the two things most likely to start arguments: politics and faith.

Now the 34-year-old Christian who has on his own studied Islam, Buddhism and Hinduism sees his work as more of a marriage counselor. He works to get faith and political leaders together so they can understand the issues that unite them.

His job is to show people the links between political issues, morality and faith. If that's achieved, he said, votes will come naturally.

Ground transportation

2007-12-17T08:04:00.000-08:00

Ground transportation

Rail

The airport was originally planned to be served by the Narita Shinkansen, construction of which was started in 1974, but the same expropriation issues afflicting the airport also hit the new line and the plan was eventually officially abandoned in 1987. Direct train service to the terminal, on ordinary trains using a short spur track from previous right of way, thus only started in 1990, twelve years after the airport opened.

At present, Narita Airport has two rail connections, operated by Keisei Electric Railway and JR East. A third line, the Narita Rapid Railway, is currently under construction and scheduled for completion in 2010. Trains to and from Narita stop at Narita Airport Station (成田空港駅 Narita-kūkō-eki) in Terminal 1 and Airport Terminal 2 Station (空港第２ビル駅 Kūkō-daini-biru-eki) in Terminal 2.

The most expensive train (and one of the fastest) to the airport is the Narita Express. Journey times between the airport and Tokyo Station in Chiyoda, Tokyo vary from 53 minutes to 70 minutes depending on the time of departure. The price from the airport to Tokyo station is 3,140 yen in ordinary class.

All Narita Express trains serve Narita Airport Terminal 1, Narita Airport Terminal 2 and Tokyo Station. Some trains also make additional stops between the airport and Tokyo - at Narita or at Chiba Station.

After Tokyo Station (when coming from Narita), some trains split into two. One part continues on the Yokosuka Line to Kanagawa Prefecture, stopping at Yokohama Station in Yokohama (90 minutes) and Ōfuna Station in Kamakura (110 minutes). One part takes the Yamanote Line to Shinjuku Station in Shinjuku and Shibuya (80 minutes). The other part then either takes the Chūō Main Line, continuing in Tokyo and serving Tachikawa Station in Tachikawa (105 minutes), Hachioji Station in Hachioji (115 minutes) and Takao Station in Hachioji (2 hours), or takes the Saikyo Line to Ōmiya Station in Saitama, Saitama Prefecture (2 hours and 15 minutes).

All seating on the Narita Express trains is reserved. The assigned seat number and car number are indicated on the tickets. Tickets can be purchased from agents in the arrivals hall of each terminal and from automatic ticket vending machines.

JR also offers rapid service Kaisoku Airport Narita trains to Tokyo Station, which take 90 minutes but cost less than the Narita Express. These trains stop at several stations on the Narita Line and Sobu Line en route to Tokyo. Most continue on to stops on the Yokosuka Line, going as far as Kurihama Station in Yokosuka, Kanagawa Prefecture.

Waste Management Tours-By Brian Dennert

2007-12-17T08:03:00.000-08:00

( Of course, I am kidding about the importance of taking a tour, but I appreciate the time WM took even after I released some of their documents from a variety of sources. )

The Simi Valley Landfill offers free tours to the community to learn more about their operations and plans for expansion. I took them up on the invite and went on a tour myself today.

I don't have time to tell you all about the things I learned but I encourage everyone to go to their website and learn more for yourself.

They have many innovative environmental programs that we should all learn more about as we discuss their proposed expansion. I forgot to ask if they have a position on reducing co2 emissions because of climate change. But they did mention that many of their trucks run on alternative energy.

Thanks guys and good luck with the Arroyo clean up this weekend.

When you click on continue reading there is a flow chart about the approval process supplied to me by Waste Management. If each step takes a month in about the year 2032 the dump will be expanding.

This flow chart was provided for me by Waste Management

Maker Money

Economic characteristics

Medium of exchange

Unit of account

Store of value

Money

Debt & Arguments against debt

Levels and flows

Inflation indexed debt

Debt & Effects of debt

Debt & Debt ratings, risk and cancellation

Risk free interest rate

Ratings and creditworthiness

Cancellation

Satisfaction by writeoff

Debt & Securitization

Debt, inflation and the exchange rate

Debt & Accounting debt

Debt & Payment & Types of debt

Payment

Types of debt

Debt

Helmet & Function and structure

Types of helmets

Helmet & Military origins and symbolism

Helmet

Insurance contract & Parts of an insurance contract

Parts of an insurance contract

Life insurance specific features

Definitions

Insurance contract

General Features

Insurance contract

General Features

Insurance & Controversies.. & ..

The insurance industry and rent seeking

Criticism of insurance companies

Glossary

Insurance & Controversies.. & Insurance patents

Insurance & Controversies..

Redlining

Insurance & Controversies.

Complexity of insurance policy contracts

Health insurance

Dental insurance

Insurance & Controversies

Insurance insulates too much

Closed community self-insurance

Insurance & Financial viability of insurance companies

Insurance & Size of global insurance industry

Insurance & Life insurance and saving

Insurance & Types of insurance companies

Insurance & Types of insurance

Insurance & History of insurance

Insurance & Gambling analogy

Insurance & Insurer’s business model

Insurance & Risk limiting features

Insurance & "Safe harbor" exemptions

Insurance & Is there a brightline test?

Does the contract contain adequate risk transfer?

When is a policy really insurance?

Insurance & Indemnification

Principles of insurance

Insurance

Fixing Cleveland's foreclosure crisis

Laptop & Security

Laptop & Health issues

Laptop & Performance

Laptop & Upgradeability

Laptop & Disadvantages

Standardization issues

Compatibility issues

Laptop & Parts

Laptop & History..

Laptop & History.

Laptop & History

Laptop & Categories

[edit] Related devices

Laptop

Judy Mikels VS Jim Dantona late breaking news.