Helping Communities Manage risks from the ground up.

 See Contribution base.

A provision requiring the insured to pay part of the loss before the insurer makes any payment under the terms of the policy. Deductibles typically are found in property, health, and automobile insurance contracts. The purpose of establishing deductibles is to eliminate small claims and reduce the average pure premium and administrative costs associated with claims handling. Deductibles can also reduce moral hazard by encouraging persons to be more careful with respect to the protection of their property and prevention of loss. Annual deductibles and waiting periods are the most common forms of deductibles in health insurance contract.

 The amount of a good or service that consumers seek to buy at a given price. Solvent demand implies the ability to pay as well as the willingness to pay. Elasticity of demand is a measure of the responsiveness of total spending on a particular good or service to a change in its price. Elastic demand implies that as the price goes up the total expenditure falls. Inelastic demand implies that as the price goes up total expenditure goes up also. Necessities typically have inelastic demand (given an adequate income base). For example, the imperative to have an aching tooth removed means that the dentist is in a position of power to charge a high price; such dental services have inelastic demand and it is unlikely that a lower price would attract people not suffering from toothache to have a tooth removed. The concept of “necessity” and therefore of inelastic demand, is cultural. In some cultures prenatal care may not be considered a necessity. Demand for some procedures may be truncated in poor communities. This means that all though the demand for surgery (for example) is inelastic and does not change with price, above a certain price it becomes zero. As half an operation is not an option, the demand is truncated due to poverty.

 Every person who is covered by virtue of payments made by one paying member. The record of every dependent must identify the paying member s/he depends on.

 A saving constituted when the observed total benefit cost is lower than the reinsurance threshold. The microinsurer can use this amount at the end of the financial period.

 An insurance technique to reduce the expected probability of a cost-generating event included in the benefit package. Risk diversification refers to the practice of including in one benefit package events that are not inter-correlated. Time diversification refers to the practice of holding the risk for longer periods, to reduce its per-year average standard deviation and thereby decrease the uncertainty related to the exposure. The average cost of claims will not decrease with time, as it is not related to the standard deviation but to the average incidence of a cost generating event.

 See Contribution base.

A provision requiring the insured to pay part of the loss before the insurer makes any payment under the terms of the policy. Deductibles typically are found in property, health, and automobile insurance contracts. The purpose of establishing deductibles is to eliminate small claims and reduce the average pure premium and administrative costs associated with claims handling. Deductibles can also reduce moral hazard by encouraging persons to be more careful with respect to the protection of their property and prevention of loss. Annual deductibles and waiting periods are the most common forms of deductibles in health insurance contract.

 The amount of a good or service that consumers seek to buy at a given price. Solvent demand implies the ability to pay as well as the willingness to pay. Elasticity of demand is a measure of the responsiveness of total spending on a particular good or service to a change in its price. Elastic demand implies that as the price goes up the total expenditure falls. Inelastic demand implies that as the price goes up total expenditure goes up also. Necessities typically have inelastic demand (given an adequate income base). For example, the imperative to have an aching tooth removed means that the dentist is in a position of power to charge a high price; such dental services have inelastic demand and it is unlikely that a lower price would attract people not suffering from toothache to have a tooth removed. The concept of “necessity” and therefore of inelastic demand, is cultural. In some cultures prenatal care may not be considered a necessity. Demand for some procedures may be truncated in poor communities. This means that all though the demand for surgery (for example) is inelastic and does not change with price, above a certain price it becomes zero. As half an operation is not an option, the demand is truncated due to poverty.

 Every person who is covered by virtue of payments made by one paying member. The record of every dependent must identify the paying member s/he depends on.

 A saving constituted when the observed total benefit cost is lower than the reinsurance threshold. The microinsurer can use this amount at the end of the financial period.

 An insurance technique to reduce the expected probability of a cost-generating event included in the benefit package. Risk diversification refers to the practice of including in one benefit package events that are not inter-correlated. Time diversification refers to the practice of holding the risk for longer periods, to reduce its per-year average standard deviation and thereby decrease the uncertainty related to the exposure. The average cost of claims will not decrease with time, as it is not related to the standard deviation but to the average incidence of a cost generating event.