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Monday, October 20, 2008


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, and can be thought of a guaranteed small loss to prevent a large, possibly devastating large loss. An insurer is a company selling the insurance. The 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.
Principles of insurance
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.
2. 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 person 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.
3. 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.
4. 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.
5. 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, 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.
6. 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.
7. 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 insurer's 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.

Sunday, August 17, 2008

The Biggest Spider

Goliath Tarantulas are Fearsome Predators
There's something about spiders that gives most people the creeps, instilling a sense of fear and loathing upon seeing one. It's as though there's a part of the human brain that perceives the form of a spider as dangerous or threatening. Perhaps those deep dark feelings we get when we see a spider are echoes of an ancient human behavioral response known as instinct. Most of the thousands of species of spiders on this earth carry a venom that is virtually harmless to humans, but there are a few species which carry a deadly venom. Based on primitive human experiences a permanent message has been embedded in our genetic make-up, one that warns us that spider = danger. And when we see a spider that is as large as a dinner plate, we get the creeps BIG TIME.
But the goliath bird-eating spider is pretty harmless to humans, as are most species of tarantulas. They do carry venom in their fangs and have been known to bite humans when threatened, but the venom just causes swelling and mild pain for a few hours (like a wasp sting). Tarantula bites to humans are usually in self-defense and don't always contain spider venom - what is known as a "dry bite".
The most dangerous thing about the goliath bird-eater is its ability to flick urticating hairs from its body at any creature it perceives as a threat, including humans. This is not a species of tarantula you'd keep as a
pet. The tiny, almost invisible hairs that it voluntarily sends floating through the air are extremely irritating to our skin, and can cause real problems if they got into delicate mucous membranes around eyes and mouth.
As hunters, tarantulas can be fearsome predators. Tarantulas don't have any special techniques, such as building intricate webs, or leaping great distances, for hunting their prey. They use good, old-fashioned stealth and strength, very much like wild cats. They sneak up on their prey and pounce on the unsuspecting victim, inflicting a fatal bite with venomous fangs.
One fascinating feature of goliath bird-eaters, as well as some other tarantula species, is their ability to make noise. We don't normally associate spiders with noise, like we do with dogs, cats, birds, etc. We are accustomed to seeing spiders silently, stealthily crawling across walls, floors, and the sidewalk. But when feeling threatened, the goliath bird-eater is capable of making a pretty loud hissing noise by rubbing bristles on its legs together. Called stridulation, it can be loud enough to be heard up to 15 feet away!

Creepy Crawlers

Tarantulas use their fangs for subduing their prey and carrying it to their dens (or to a safe location) for devouring at their leisure. They don't have teeth for tearing and chewing their meals so they regurgitate digestive juices onto their victim. These digestive juices break down the soft tissues so that the spider can slurp up its meal. All that's left when the spider has finished its meal is bones, skin, fur and/or feathers. The goliath bird-eating spider has been known to take young birds from their nests for its mealtime pleasure - hence the name "bird-eater". Tarantulas eat frogs, small snakes, beetles, lizards, and even bats.

Wednesday, July 2, 2008

World Records

Way back on 5th December 1766, James Christie founded his world famous auction house. This has led to many of the biggest money records on our database, as well as some quirky ones - judge for yourself from the following collection of ultimates:
Largest auction of comic books
The world's largest auction of comic books, comic art, movie posters and related memorabilia took place on 13 October 2002. The four-day auction, conducted by Heritage Comic Auctions of Dallas, Texas, USA realized $5,207,430.65 (£3,335,958).
Most expensive baseball card sold at auction
The most valuable baseball card is a rare tobacco card issued by the American Tobacco Company in 1909 and known as T206 Honus Wagner. It was sold in a deal brokered by SCP Auctions of Mission Viejo, California, USA, to an anoymous collector for $2.8million (£1.37 million) and announced on 6 September 2007.
Most expensive book sold at auction
An original four-volume subscriber set of J.J. Audubon's The Birds of America was auctioned for $8,802,500 (£5,567,573) by Christie's, New York, USA, on 10 March 2000
Most expensive car registration
The most expensive car license plate - made up of the single digit, '5' - was sold to Al Awail Holding company (UAE) for Dh25.2 million ($6.86 million, £3.46 million) during a special number-plate auction organised by Emirates Auction Company, and held in Abu Dhabi, United Arab Emirates, on 12 May 2007
Most expensive cow sold at auction
The highest price paid for a cow is US$1.3 million (£914,000) for a Friesian at an 1985 auction in East Montpelier, Vermont, USA.
Most expensive kiss sold at auction
In August 2003, Joni Rimm (USA) paid $50,000 (£31,000) at a charity auction for the privilege of one kiss with Hollywood actress Sharon Stone.
Sharon auctioned the kiss in aid of Project Angel Foods - a Los Angeles based charity providing free meals for people with HIV and AIDS.
Most expensive living artist at auction
The most expensive piece of work by a living artist sold at auction is Lullaby Spring a pill cabinet created in 2002 by Damien Hirst (UK), which sold at Sotheby's in London, UK on 21 June 2007 for £9,652,000 ($19.2 million). The stainless steel cabinet is one of four and measures 3 m (9 ft 10 in) wide and displays 6,136 hand-crafted pills. This broke the long-standing record held by Jasper Johns (USA) whose Figure 4 (1959) sold for $17.4 million (£8.7 million) at Christie's, New York, USA on 16 May 2007.