• No event till date has drawn public attention of all of us on the importance of insurance as intensely as the September 11 terrorist attacks. That disaster led virtually all insurers to withdraw or seek to withdraw coverage for terrorist-related events which most states approved.  As a result  Terrorism Reinsurance Act of 2002 (TRIA) came into act Under which the federal government agreed to pay for 90 percent of an insurer's losses after the insurer first absorbed losses up to 7 percent of its earned premiums. TRIA will expire next year and its appropriate time to review the act. Does really this insurance and capital markets could not really absorb large, even catastrophic, losses without undue stress. Some of the most common arguments in favor of direct government intervention into the terrorism insurance market include the difficulty of forecasting future losses, the magnitude of losses and the fact that many people will rationally forgo insurance because they believe the government will bail them out after a major loss. These arguments and finds are most deficient because they fail to explain why the private market solution is inefficient.

Brokers and the insurance on disputed coverage

Today insurers seem more prone than ever to contesting large claims called as "non-verifiable losses" and seek to explain how insurance brokers play a role in resolving—or preventing—the disputes. Insurers often try to prevent disputes. Because they make an investment in acquiring information about their larger customers, and do not want to lose them, insurers have incentives to make reasonable offers to pay non-verifiable losses and thus avoid disagreements. Some insurers might also assist their customers in controlling losses by providing engineering or risk-reduction services. In short, the highly concentrated nature of the brokerage industry tends to work in favor of insureds if and when they experience non-verifiable losses. This may be the rare exception where a highly concentrated market structure works in favor of customers rather than producers

The crisis in medical malpractice

In several states around the nation, medical malpractice insurance has become either prohibitively expensive or totally unavailable. It is difficult to sue physicians for non economic damages suffered by patients. Insurers take steps to limit their own risks, most prominently by replacing the "occurrence" policy (which covered malpractice as long as it occurred during the policy period) with a "claims-made" policy (covering only those claims filed during the policy period). Moreover, doctors began to self-insure by forming their own mutual companies and "risk retention groups" to cover their malpractice liabilities. In his view, what is needed is a more realistic definition of malpractice, which acknowledges that even when physicians take all reasonable precautions, the innovative and experimental treatments that modern medical science makes possible and that patients demand do not always produce the desired result.

 Thus, Insurance is too important to the fabric of the American economy and indeed to our society. If individuals and businesses could not obtain insurance against various causes of financial misfortune, the American economy would be much less productive and consumption choices much more constrained