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MSU expert gives 'Insurance 101' to House Insurance Committee; members ask about deductibles, reinsurance and life policies
Summary
Tom Humphreys, director of the Insurance and Risk Management program at Michigan State University’s Eli Broad College of Business, told the House Insurance Committee that insurance functions as “a financial safety net” and walked members through underwriting, premiums, deductibles, claims and reinsurance.
Tom Humphreys, director of the Insurance and Risk Management program at Michigan State University’s Eli Broad College of Business, gave the House Insurance Committee a roughly hour-long “Insurance 101” overview, telling members insurance is “a financial safety net” and explaining underwriting, premiums, deductibles, policy limits and claims handling.
Humphreys described insurance as a risk-transfer tool that “facilitates commerce” by allowing individuals and businesses to avoid holding large reserves against rare but costly events. He summarized how insurers pool risk under the “law of large numbers,” use underwriting to limit adverse selection, and rely on actuaries to set premiums. He also noted the role of the Department of Insurance and Financial Services (DIFS) in…
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