Knowledge@Wharton -- Insurance and Pensions

Tata Group's Farrokh Kavarana: 'We Are Just Trying to Reclaim Our Legacy'

Thu, 09 Apr 2009 15:46:33 EST

When insurance giant AIG ran into problems during the subprime mortgage crisis, how did that affect the company's two ventures with India's Tata Group? The impact was surprisingly small, according to Farrokh Kavarana, a director of Tata Sons, who oversees Tata AIG Life Insurance and Tata AIG General Insurance. Tata AIG's ventures are well capitalized and they more than meet regulators' solvency norms, he told India Knowledge@Wharton in an interview during the recent Wharton India Economic Forum in Philadelphia. Kavarana received the 2009 Wharton Indian Alumni Award during the Forum.

View from Dalian, China: 'The New Risk Architecture' and Our Growing Interdependence

Thu, 15 Nov 2007 16:32:12 EST

In early September, nearly 1,700 leaders representing business, politics, the arts and universities gathered in the city of Dalian, 600 miles east of Beijing. Erwann Michel-Kerjan, managing director of the Wharton Risk Management and Decision Processes Center, who was selected as one of the World Economic Forum's Young Global Leaders this year, attended the five-day event, which included participants from 90 countries. He offers his report on what he calls "The New Risk Architecture."

Defying Expectations: Rainfall Insurance in India and Bank Lending in Pakistan

Thu, 31 May 2007 14:04:12 EST

In developing countries, economic behavior does not always follow patterns set in developed ones. Two papers presented at a conference on India's Financial System explore such examples. One asks why the poorest Indian farmers choose not to purchase inexpensive rainfall insurance that could help them avoid starvation in a drought. A second explores an unexpected phenomenon in Pakistan, when banks failed to increase their business loans despite a rich increase in capital after the September 11 terrorist attacks. The conference, held at Wharton in April, was organized by the school's Financial Institutions Center with the Centre for Analytical Finance at the Indian School of Business in Hyderabad and the Stockholm-based Swedish Institute for Financial Research.

Insurance: Indian and Foreign Firms Test Positive for Growth Steroid

Thu, 16 Nov 2006 16:43:37 EST

The new crop of private and foreign players in India's de-nationalized insurance industry is achieving growth rates in market shares that are bigger than its ambitious estimates. Insurance penetration -- both life and non-life -- has taken off vertically with a proliferation of products, and the former state-owned monopolies are pulling out the best in their armory. India Knowledge@Wharton spoke to some of the key players, industry regulators and consulting houses to capture a ringside view of one of the biggest slugfests these days in the emerging economies.

Unlike Death and Taxes, Pensions Are No Longer Guaranteed

Wed, 08 Feb 2006 16:31:18 EST

IBM. Verizon. Sears. Hewlett-Packard. Motorola. The list of corporations that have put a halt to guaranteed pension plans comes as a jolt to Baby Boom employees entering what they thought would be their peak pension-building years. At the same time, new accounting rules and Congressional legislation are being drafted to close the U.S. pension-funding gap, now estimated at $450 billion. While some proposals under discussion could make it easier for companies to discontinue defined-benefit plans, others would create incentives to support defined-contribution programs, such as 401(k) plans, according to Wharton faculty and pension experts. Amid all this flux, they add, one thing seems certain: Pension plans have become risky business.

Catastrophe Modeling: A New Approach to Managing Risk

Wed, 06 Apr 2005 17:18:11 EST

Before Hurricane Hugo swept through parts of the southern U.S. in 1989, the insurance industry had never suffered a loss of more than $1 billion from a single disaster. Since then, numerous catastrophes have exceeded that figure, even as development in danger zones continues to increase. It's a trend that emphasizes, as never before, the need to manage risk on both a national and a global scale. "People today are asking the question, 'How do we scientifically evaluate catastrophic risk?'" says Wharton's Howard Kunreuther, co-author -- along with Patricia Grossi -- of Catastrophe Modeling: A New Approach to Managing Risk. The book analyzes the role of catastrophe modeling in developing risk management strategies to help reduce losses from future disasters, ranging from floods and hurricanes to environmental damage and terrorism.

Older Workers: Untapped Assets for Creating Value

Wed, 09 Feb 2005 16:50:03 EST

The days when an executive could look forward to a leisurely retirement out on the golf course are over, thanks to a possible looming job shortage, a graying population, low savings rates and an insecure Social Security system. The impact of these factors on both workers and companies was the subject of the Symposium on Older Workers, co-sponsored recently by the AARP Global Aging Program along with Wharton's Center for Human Resources and Boettner Center for Pensions and Retirement Research. Speakers included AARP CEO William D. Novelli, Olivia Mitchell, executive director of Wharton's Pension Research Council, and Thomas Dowd, a deputy assistant secretary at the U.S. Department of Labor.

To Pay or Not to Pay: Business Weighs the Cost of Terrorism Coverage

Wed, 07 May 2003 00:00:00 EST

Nearly two years after the September 11 terrorist attacks, businesses continue to wrestle with the issue of whether to buy terrorism insurance. Confronted with high premiums and their own skepticism about whether such coverage is necessary, many managers are deciding against it. At a conference sponsored by the Wharton Risk Management and Decision Processes Center on April 28, insurers, reinsurers, academics and modelers discussed the risks of terrorism and other �extreme events.�

Conglomeration or Strategic Focus: Which Is the Better Choice?

Fri, 17 Sep 1999 10:04:55 EST

The latest wave of mergers and acquisitions among financial institutions and insurance companies has led to the rise of �universal banks��firms of enormous size and product scope. Although this trend promises to continue, is it wise for companies to integrate different lines of business? Or is it better to remain specialized in an established area of expertise? A study by J. David Cummins, executive director of the S.S. Huebner Foundation for Insurance Education, and three colleagues for the Wharton Financial Institutions Center provides some answers to the conglomeration vs. specialization debate.