Government Insurers Study Note

Greene [14] and Weining [33] provide an excellent introduction to government insurance including the five main reasons for government insurance, which are summarized in this study note. Both the federal and state governments are involved in insurance as regulators of insurance companies and as insurers. As insurers, they participate in a number of insurance programs either as the sole insurer, in partnership with insurance companies or in competition with insurance companies. Several major programs that are discussed elsewhere in the syllabus include the National Flood Insurance Program, Social Security, Guaranty Funds, FAIR plans, and the Maryland State Auto Plan. In this study note, we will discuss state and federal involvement in Workers Compensation Insurance, Crop Insurance, Unemployment Insurance, Pension Benefit Plans, Catastrophe Funds, and the Terrorism Risk Insurance Act of 2002 (TRIA) and extension. Is government participation in insurance necessary? According to Greene and Weining, there are several reasons for government participation in insurance: • Filling insurance needs unmet by private insurance • Compulsory purchase of insurance • Convenience • Greater efficiency • Social purposes