criteria used to evaluate a government program

oxalis

Hi Graham,

I find it not super clear as to how to evaluate the "necessary" and "efficient" criteria

is it necessary? state what the insureds expect from the government?
ex: wc, terrorism, flood -> victims expect government financial assistance after the event, so necessary?

is it efficient? state from the perspective of lower premium? if no commissions, no profit then lower premium, so efficient? sometimes in the exam sample answer it also says government infrastructure is already in place, but this is the 'convenience' aspect of the government insurance (FCCES), but not related to efficiency?

Thanks!

graham

You're absolutely right - it isn't clear from the reading and it isn't very clear from the examiner's reports either.

I find it helpful to keep standard examples in mind for these types of questions.

• efficient? The best example is public auto insurance. It's efficient because there are no commissions and this savings can be passed on to the customer.
• necessary: A good example is terrorism after the Sept 11 terrorist attacks. Commercial insurers stopped offering terrorism coverage so the government had to provide it instead.

A good strategy for answering these types of questions on the exam is to relate it to a past question (as above) or if that isn't possible, make sure to state relevant facts and then provide a logical conclusion. For questions like this, the examiners would likely accept more than one answer as long as it is argued logically and you show you understand the facts and concepts.

Something else to remember about this reading is that it is a U.S. reading so some of it may not even apply to Canada, which makes it even more confusing unfortunately.