Everyday PTSD Compensation: Mental Trauma Over Sense?

As PTSD was redefined as something that could occur during peacetime work related activity, will falsified compensation claims be the rule, rather than the exception?


By: Ringo Bones


As Capitol Hill still ruminates over President Obama’s proposed healthcare reforms, the mental health side of healthcare insurance providers could face its toughest challenge yet ever since the DSM – IV definition of post traumatic stress disorder or PTSD as a psychological trauma that could also occur during peacetime related activity. Given the limit resources of most of the worlds mental health providers, could ordinary folks claiming PTSD compensation that they acquire during their 9 to 5 jobs deprive care to those who needed it most – like the returning veterans of our “Global War on Terror”?

Even though “everyday PTSD” or “9 to 5 PTSD” as it is being derogatorily called is still largely a phenomena of the working class of the affluent West. Due to the fact that cultures in other parts of the world that are staunchly clinging to their machismo still define seeking compensation for the “intangible” mental trauma that you got from work as a sissy act. These people’s views could change though given that the number of employees claiming work related PTSD that received monetary compensation is on the rise. Is the latest surfeit of gifted personal injury lawyers to blame?

Receiving a generous monetary compensation for peacetime work related PTSD is still not a piece of cake though due to the adversarial nature of the legal system that oversaw such claims proceedings. So a skilled personal injury lawyer is a must. The claims seeker often endures being presumed as a fraud in a court of law. But given that people who got a somewhat questionable PTSD compensation is on the rise while the true nature and level of trauma experienced in general peacetime society is still an unexamined phenomena. Should health insurance claims adjusters do their “homework” first before shelling out huge cash settlements to work related PTSD claims?

The problem with some overly generous cash compensation to peacetime work-related PTSD claimants - even though the funds are more often than not is doled out via structured settlements – is that there is no legal oversight whether the funds and resources are used to rehabilitate the PTSD claims seeker. Since these claimants are former valued personnel in the workforce, peacetime work-related PTSD claimants are better off undergoing a rehabilitation program – if they are genuinely suffering from PTSD. As opposed to just receiving monetary compensation to avoid being gainfully and responsibly employed, rather than being inebriated all day with their compensation money. Personal injury lawyers could also reacquaint themselves with the art of ethical practice.

Insuring Michael Jackson

It is a well-known fact that Michael Jackson is one of the top money earners of the U.S. and the global music industry, but how easy – or difficult – is it to insure the King of Pop?


By: Ringo Bones


Since the untimely and tragic passing of Michael Jackson back in June 25, 2009, his planned This is It tour seems to have become an insurance company’s nightmare. But given the sums of money involved, will the parties involved in insuring Michael Jackson gain financially in the end? After all, Jackson’s musical talent is well backed by having the ability to earn millions.

Ever since his musical prowess enabled him to earn millions of dollars with relative ease, Michael Jackson has always been designated into the special coverage risk aisle as an insurance coverage client - Not to mention his lifestyle choice. The price of such coverage tends to be high because the broad statistical basis for computing most insurance rates – i.e. statistical analysis that applies to us ordinary folks – does not apply to Michael Jackson’s highly individual risk.

So when the broker who facilitated in insuring Michael Jackson’s This is It tour bends over an underwriter’s box at Lloyd’s of London to discuss an insurance risk tailored to Mr. Jackson’s particular case. It is safe to guarantee that such discussions will be a lengthy one. Although Lloyd’s has for years been famous it’s willingness to underwrite unique risks for which adequate tables of probability are not available. Such as the cancellation of a major event due to the untimely death of an apparently healthy 50 year old man still in the prime of health.

Michael Jackson’s cancelled tour could also become the biggest ticket refund in history add to that the tour promoter AEG Live may have trouble collecting on it’s insurance only complicates matters. Insurers had sold an 18 million US dollar policy through Lloyd’s the famous London-based insurance market that was intended to help AEG Live recoup costs if the concerts the company was staging with Mr. Jackson were cancelled due to accident, according to the insurance company’s actuaries.

The insurance policy also could have provided coverage in case of cancellation due to medical-related issues according to a Lloyd’s insurance actuary. But that part of the coverage was dependent on the results of a physical that Mr. Jackson was scheduled to take. Thus raising the possibility that the coverage might not apply. Although Randy Phillips CEO of AEG Live had witnessed Michael Jackson passing his physical exam with flying colors in preparation for the upcoming tour several weeks before Jackson’s tragic and untimely death.

According to Bermuda-based insurer Validus Holdings Ltd., a group of insurers were covering the This is It 50-date concert series through the Lloyd’s insurance market, including its subsidiary Talbot Holdings Ltd. But Validus said it had less than $3 million at risk. But no matter what the outcome of the insurance pay-outs will be, Michael Jackson’s estate can still manage to cash-in on the cancellation of the This is It tour slated for July 13, 2009. There are even plans to release the video coverage of Michael Jackson’s elaborate rehearsals and full run-through at the Staples Center on DVD. Including the rehearsal footage two days before he died. Thus making it a part of a very good insurance policy from a financial perspective.

Microinsurance: Credit Insurance for the Little Guy?

Introduced as part and parcel in the financial service of microfinance / microcredit clients, does microinsurance really protect the “Little Guys” – i.e. microcredit-funded entrepreneurs?


By: Ringo Bones


Ever since the runaway success of Dr. Muhammad Yunus’ Banking for the Poor-inspired microcredit and microfinance programs across the globe, many microfinance institutions had began introducing microinsurance services in order to protect the financial successes of microfinance and microcredit clients against the onslaught of the global economic downturn. Given that some established “conventional” economist had always been skeptical of these “extremely subprime loans”, does microinsurance really protect these small business owners against the economic uncertainties of the global credit crisis circa 2009? Or is this just a “brilliant” financial instrument made to extract the maximum amount of profits from the poor microcredit and microfinance clients.

According to some official microcredit and microfinance service providers’ websites, microinsurance is defined as a system by which people, business, and other organizations funded by microcredit and microfinance programs make premium payments to share risks. Access to insurance with low premium rates enables microcredit funded entrepreneurs to concentrate more on growing their business – i.e. reinvesting a significant portion of their profits back into their business – while providing mechanisms that mitigate risks affecting property, health, and the ability to do work. Especially during the fiscal uncertainties of our current global economic downturn where every corporate and business entity of every size, shape or form are affected in a negative way.

The rationale behind microinsurance is to provide a system that will help poor people - especially microfinance and microcredit recipients – cope with sudden expenses associated with serious illness (current swine flu outbreak?) or loss of assets. Studies recently conducted on microfinance and microcredit recipients / clients have shown that merely having access to conventional savings accounts has also proved to be an incentive to save for that proverbial rainy day. Clients who join and stay in microfinance / microcredit programs have better economic conditions than non-clients do – at least from a cash-based / credit-based economic point of view.

The question now is does microinsurance – like it’s well established sibling, credit insurance had done to big business – really help microcredit / microfinance recipients? Though it is yet a relatively new financial scheme, microinsurance – at least on paper – could theoretically provide microcredit and microfinance institutions around the world the ability to provide financial security to their established clients. As an investor in our local microcredit / microfinance provider for almost five years, I’ve noticed that our local fish and fresh produce vendors had been enjoying relative financial security that can’t be found just ten years before. And this was the advent before microinsurance schemes were introduced. From my point of view, it is still way too soon to conclude that microinsurance – in actual practice – is just another useless business expense. Maybe we’ll check it out in a few months’ time.

Of Piracy and Occupational Disability Insurance

Given the cost of the upkeep of the commercial maritime traffic through the dangerous waters of the Gulf of Aden, will sky-high insurance premiums make this area a no go zone someday?


By: Ringo Bones


Occupational disability insurance is a relatively complex issue that often grabs the news headlines whenever a claim refusal happens, but can the various insurance providers still maintain economic viability when their regular customers are increasingly involved in insuring their business activities in increasingly hostile locales. Like the sea-lanes off the coast of Somalia.

At present, it is still economically viable – in spite of the rising insurance premiums and risk of piracy – for commercial bulk carriers to ply through the treacherous pirate infested waters of the Gulf of Aden to deliver their cargo of low-wage Asian manufactured goods. In order to meet the insatiable demand in European markets. But will that fateful day eventually come that commercial shipping through the Gulf of Aden will become so risky and prohibitively costly. So risky and costly in insurance premium terms that maritime traffic will be rerouted via the Cape of Good Hope as they travel from East Asia to Europe in spite of the additional fuel expenditure and longer transit time?

Currently occupational disability insurance issued to commercial shipping traffic in high-risk areas, like the Gulf of Aden, only cover the risk of injury and death by acts of piracy. But eventually, the occupational disability insurance being issued might someday include proviso for hazardous toxic waste exposure given that on-going preliminary investigation have shown that the Gulf of Aden had been used as an illegal toxic waste dump for over 20 years. Although the proof of the illegal toxic waste dumps that had been contaminating the waters of the Gulf of Aden are yet to be fully vetted and peer approved. Given that there is a clear and present danger that scientists working for the United Nations Environmental Program (UNEP) might be abducted and held for ransom as they collect for evidence of hazardous toxic waste contamination in Somali waters. And with the preexisting United Nations-style bureaucracy, the investigation could take awhile, but in time, it will eventually be proven. But for now, the need for strengthening and legitimizing the Somali government so that it can solve the piracy problem on its own terms has been given top priority.

Occupational disability insurance – also called permanent health insurance – comes in 2 basic types: occupational disability and general disability. An occupational disability policy provides the insured with a source of income in the form of disability benefits when the insured is no longer able to perform substantially all of the material acts of his or her occupation as designated in the policy. While a general disability policy typically provides benefits when the insured is unable to perform substantially all of the material acts of any occupation. Whether an insured under general disability policy satisfies the definition of total disability depends on the policyholder’s training, experience and future ability to secure gainful employment.

Given that the recent high-profile rescue of the Maersk Alabama skipper Capt. Richard Phillips and the US Navy SEAL team that rescued him might or might have been exposed to hazardous toxic chemicals being illegally dumped in the Gulf of Aden. Hopefully their permanent health insurance is sufficient to cover any future ill-effects of their “ordeal” without their insurance providers being dragged into the media spotlight in the near future due to claim refusals because of the lack of evidence of hazardous toxic chemical and radiation exposure. Or perhaps that lone surviving Somali teen pirate currently under FBI custody – Abduwali Abdukhadir Muse – could plead not guilty due to diminished capacity because of his exposure to the illegal hazardous toxic waste dumps in the Gulf of Aden. Looks like Somali piracy won't end any time soon.

The 1906 San Francisco Earthquake: Biggest Insurance Fraud Ever?

Given that the corrupt city officials at the time downplayed the actual damages and deaths, was the “famous”1906 San Francisco Earthquake the biggest case of insurance fraud ever?


By: Ringo Bones


It all started at 5:13 on the morning of April 18, 1906. The geological forces that shaped the San Andreas Fault for millions of years caused the ground beneath San Francisco to sway. The tremors of that terrible earthquake lasted for only 48 seconds, but – as widely documented at the time of the terrible tragedy – overturned stoves spilled out burning coal and fuel oil as the numerous wooden buildings collapsed. Thus fires were ignited almost simultaneously in a dozen - or so - place and soon much of the city was ablaze. The widespread fires took three days to burn themselves out, destroying more than four square miles of the center of the city. Even though graft indictments were later brought up against Mayor Eugene Schmitz, and political boss Abe Reuf plus the ousting of the board of supervisors in 1907, was the full extent of the insurance fraud – via fraudulent insurance claims of the 1906 San Francisco Earthquake ever documented?

Though archival evidenced has surfaced years later that “hints” the true extent of the corruption and fraud instigated by city officials during the 1906 San Francisco earthquake. It was common knowledge at the time that San Francisco’s mayor and various city officials instigated the “political spin” that would allow the city of San Francisco to recover in an economically and politically expedient way as to attract investors for the rebuilding effort as soon as possible. Evidence of the airbrushing / retouching of press photos of the disaster with the behest of the San Francisco City government surfaced years later. Proof that the 2005 Hurricane Katrina disaster relief fiasco is not the first incidence of ineptitude by the US Government when it comes to handling major natural disasters.

The assigning by San Francisco politicians of the US Military, local law enforcement and the local militia to protect against looting with shoot to kill orders reminiscent of the Hurricane Katrina aftermath is not the only US Government “shenanigans” committed during the aftermath of the 1906 San Francisco earthquake. The local politicians also actively aided their “rich” constituents to falsify building insurance claims via political spin that allowed them to claim for fire damages instead of earthquake damages. Which at the time established insurance providers didn’t yet issue proviso for insurance payouts due to building structural damage via earthquake. Due to the politically and economically expedient way in which San Francisco was rebuilt after the 1906 earthquake, local building planners lowered building standards with the behest of the city government by as much as 50%. Which the original rigid building standards established before the 1906 earthquake was restored only during the latter half of the 1950’s.

The shadow of the government ineptitude and shenanigans committed immediately after the 1906 earthquake still casts a long shadow until this day. San Francisco’s Geological Disclosure Act was made very easy to falsify and manipulate because of the 1906 earthquake. Some property owners – if not most of them – can easily falsify their insurance claims, especially if they are influential enough to have the proverbial “friends in high places”. Which can be a nightmare for insurance claims adjusters, risk assessors, and building inspectors.

Currently, the Geological Disclosure Act governing San Francisco remains largely unenforced. Especially on buildings built on soft sandy soil that are prone to liquefaction during earthquakes. Some parts of San Francisco still have row upon row of wooden buildings that could easily become a fire hazard during earthquakes. Even though a growing number of buildings are already retrofitted to make them earthquake-proof – including the Golden Gate Bridge and the Oakland Bay Bridge. Many buildings around San Francisco are still waiting to be retrofitted to make them more resistant to strong earthquakes.

Spacecraft and Satellite Collision Insurance

Does the recent incident of an active US commercial satellite colliding with an expired Russian military satellite necessitates the reevaluation of existing insurance of space-bound and space-based assets?


By: Vanessa Uy


Last Tuesday – February 10, 2009 – an active commercial US telecommunications satellite had the unlikely misfortune of colliding with an already expired – but still intact – Russian Cosmos military satellite 800 kilometers above Northern Siberia. Both Earth-orbiting satellites apparently tried to cross the same point in space at the same time as they are traveling at the standard orbital speed of 17,380 miles per hour. The collision of two still-intact satellites was the first known accident of its kind in the history of space exploration and commercialization.

The resulting collision created a debris field comprised of a little over 600 RADAR-trackable debris that has the potential of endangering other multi-billion dollar space-based assets. Like the Hubble Space Telescope and the International Space Station – which happens to travel within the same orbit window of the debris field of the recent satellite collision. Putting the long-term operations of these space-based assets in jeopardy.

As the first ever head-on crash of still-intact satellites in Earth orbit could also endanger other still active telecommunications satellites that make our current Internet and mobile phone / cellular phone systems possible. Given the existing and future risks, are existing insurance terms on space-based assets up to the task in providing equitable financial compensation when it comes to dealing with infrequent – but catastrophic – incidents such as these?

After reading Space Debris: Models and Risk Analysis by Heiner Klinkrad, the scientific data that could aid in providing equitable payouts for infrequent – but nonetheless catastrophic- satellite collisions such as these already exists. Klinkrad’s book did provide a comprehensive background in understanding the various sources of space debris and the assessment of associated risks of current and future space debris environment. While non-trackable objects – i.e. fragments too small to be “seen” by current RADAR technology - produced by historic on-orbit fragmentation events and several other sources of space debris are also discussed. Klinkrad’s book also discussed risk assessment models concerning with meteoroids when they turn into meteorite-strike hazards for both space-based assets and those back on Earth. Given that scientific data concerning the risk assessment of the impact and collision hazards of satellites and spacecraft already exists, will other academic research like that done by Heiner Klinkrad eventually shape the future structure of insurance products intended for our commercial and scientific space-based assets?

Currently, there are some 17,000 RADAR-trackable objects scrutinized by NORAD, which by the way also warns NASA’s manned missions of incoming space-debris – if their RADAR can “see” it – so as to take the necessary evasive maneuvers. Though the celestial mechanics of more than three bodies cannot be easily analyzed using the techniques developed by Victor Szebehely – make that the 600-plus orbital debris that resulted from the February 10, 2009 satellite collision. Especially if you take into account the gravitational influences of the major celestial bodies like the Earth, the Moon, the Sun, or whichever planet comes close to us at this time. Given that the cost of space assets from construction to launch can run into the millions, insuring them won’t be cheap.

But as the established insurance clauses on satellite and spacecraft are based on sound science, should the risk assessments be constantly reevaluated since orbital debris are steadily increasing as the years go by? Back in the early 1990’s, there were only 8,000 RADAR-trackable orbital debris in existence, now it is 17,000. Sooner or later, this would result in constant risk-assessment upgrades, or developed space-launch processes that produce lesser orbital debris than current ones.

Better Risk Assessment: Keeping Insurance Premiums Reasonable?

One sure-fire way of selling insurance policies is to maximize your coverage while keeping premium rates reasonably low. Had we now got this down to a science?


By: Vanessa Uy


Back in the good old days – the previous 25 or more years to be exact – insurance company actuarial mathematicians used to statistically assess risk using a figure called the expected loss. They got it by multiplying the probability of an accident occurring times the damage done by the accident.

Henceforth, policymakers and statisticians of almost every insurance company around the world grown content in using the concept of expected loss as the sole measure of risk. But since insurance companies are always in a perpetual search of ways to “streamline” their economic “bottom line”, the quest is on to create policies that are more ambitious than the one that precedes it. An insurance policy that not only provides coverage for “catastrophes” other insurance providers won’t touch with the proverbial ten-foot pole but also can keep the client’s premium rates down to the absolute reasonable minimum (from the insurance providers perspective at least).

That fateful day came around in 1986, when a mathematician from the University of Virginia named Yacov Haimes and his team developed the partitioned multi-objective risk method or PMRM. Haimes and his team argue that insurance company actuarial mathematicians need to account for catastrophes separately from ordinary accidents in order to provide a better-structured insurance policy, one that maximizes coverage while minimizing premium rates. Rare but expensive (in monetary terms) accidents, the team pointed out could have a small-expected loss given their improbability of occurring.

In his book “Risk Modeling, Assessment and Management”, Yacov Haimes discusses the art of risk management after years of being acquainted and gaining expertise on the subject. Especially it’s important applications in such areas as engineering, science, and even the politically tinged vagaries of public policy. Haimes’ writing style equally covers the quantitative and qualitative aspects risk management by emphasizing how to quantify risk via construct probability together with real-world decision-making problems without ignoring the host of institutional, organizational, political and cultural considerations which these days often accompany such challenges.

Since developing his PMRM, Haimes has co-developed an even newer method of risk assessment called risk filtering, ranking and management or RFRM. The usefulness of RFRM in risk assessment is supported by several case studies cited in Haimes’ book. Given that Yacov Haimes has provided a new focus on minimizing the high cost associated with today’s more extensive risk management, how can all of this benefit us, the lowly policy holder, or for that matter, the whole global economy as a whole?

Ever since our on-going global economic downturn slowly – but inexorably – continues to drive all of us into an uncomfortable sense of fiscal austerity. Whoever can provide products that provide the maximum performance for the least amount of money will not only survive, but can even prosper during these times of economic hardship. If insurance companies can manage to provide us with insurance policies that offer more for less, then both – the insurance provider and the “mere” policy holder – can weather out the on-going global “financial storm” with a comfortable margin of confidence.