HEALTH INSURANCE ORANGE COUNTY .com
" WE HELP YOU FIND THE BEST! "

Maruca Financial & Insurance Services, Inc. "
A Truly Independent Brokerage Firm"
Providing unbiased solutions for your insurance needs…

Being Independent allows us to shop the top-rated insurance companies to find the best match for your needs. This saves you time, money and frustration while delivering the most cost-effective plans available.

"There is no need to feel you are alone when selecting an insurance plan. If you reside in California and need group or family health insurance, then give us a call. We will share with you strategies that others are using to keep their cost/benefit ratios in balance."

Maruca Financial & Insurance Services, Inc. is not obligated to a parent company that limits the selection of insurance products or requires sales quotas of proprietary products. Our competitive advantage is the fact that we represent your best interest at all times.

Our mission is to provide unbiased information so that an informed decision can be reached. When presented with the facts, both the pros and the cons, it is much easier to make a decision that satisfies your needs. Call Maruca Financial & Insurance Services, Inc. for reliable answers, proven strategies and viable options..

In California, medical underwriting is allowed without restriction. Medical underwriting is the process that allows insurance companies to review the medical history of prospective members. For preexisting condition requirements, the carrier may look back in a consumer’s medical history 12 months for any preexisting conditions and impose a 12 month exclusionary period for coverage of one or two people. For coverage of three or more people, the carrier may impose a 6 month look back and exclusionary period.

GROUP INSURANCE: Maruca Financial will attempt to save you money and improve your group health insurance coverage. Your current plan may be improved upon for both price and benefits. Call us for more information!

Most small businesses offering their employees Group Health insurance plans contribute towards the cost of the coverage. Some pay for all of the employees' premiums (for single coverage) and have the employees pay the premium if they need coverage for their families. Other small businesses pay a percentage of the total health insurance premium cost.

As the cost of health care continues to increase at a rate much faster than inflation, many large employers and small businesses in California choose to have their employees make a contribution towards the cost of health insurance coverage.

Managed Care vs. Fee-for Service
The health insurance plan that works best for your business is determined primarily by your location, the physicians and hospitals available through the health insurance plan, options offered by each insurance plan, and what your budget can accept.

Employee benefits are an important factor to any business in hiring and retaining a good work force. We can provide assistance to your benefit administrator in answering employees questions and requests pertaining to health insurance for groups of 20 or more. Every California business needs to review their employee benefit health insurance plan to ensure that this major expense continues to offer the highest quality group health insurance.

	THE PRODUCTS AND SERVICES WE PROVIDE:
		Life Insurance ~ Individual and Group
		Health Insurance ~ Individual and Group
		Dental Insurance ~ Individual and Group
		Medicare Supplement Plans ~ Senior planning
		Long-Term Care Insurance
		Disability Income Protection / Disability Insurance
		Employee Benefit Plans ~ Group medical, life, dental, long-term care, disability income protection, etc.
		Free Insurance Policy(s) Review: Due to our increased life expectancy, the cost of life insurance has been reduced. Today's policies offer lower mortality costs, improved underwriting guidelines, lower policy expense fees, and enhanced benefits.
		Impaired Risk Coverage: By pre-shopping multiple companies with one application allows them to find the company with underwriting guidelines that best addresses current health concerns. This strategy can save a lot of time, money, and frustration.

Why Use a Health Insurance Broker

When you are looking for heath insurance, it really can be confusing. There are all these quotes to consider, and many can be from one company. If you look at several companies, it could be doubly perplexing. How much coverage will be enough for you? What about your family?

If you don't already have health insurance through a company program, or perhaps because you are self-employed, you can find plenty of options simply doing a search online. However, do you know what you really need when it comes to health insurance? There are premiums, monthly payments, and so many options. The same company can send you 30 or so quotes based on different levels of insurance.

With so many quotes, and then there are all those options, you could leave yourself and your family under-insured if you are not careful. You could also be over-insured, and paying way too much for things you don't need.

The good thing is, you don't have to go through this alone. There are helpful people out there that understand health insurance. Health insurance brokers can explain your options to you, giving you unbiased information.

Why Use A Health Insurance Broker

Not everyone is familiar with health insurance, and understands what they need. No matter what your budget is for health insurance, an insurance broker can help you pick out the plan that is right for you. They can span different health insurance companies and pick out the most likely plans you need, or help you customize a plan.

Some people are cautious about working with a health insurance broker, thinking they will cost a lot of money. This is simply not true. They are there to work with you. No matter what plan you choose, they will get a commission from the company you sign up for. It's in their best interest to help you pick the best plan.

Going through a health insurance broker won't cost anything extra. You would pay the same rates if you went and looked at options on your own instead of through a broker. The difference is that you'll have someone on your side helping you pick the right plan. You could even save lots of money, because the broker can help you pick a plan and figure out exactly what you need.

How To Pick The Right Health Insurance Broker

Talk with other individuals about who they use. Especially talk to people who are insured through a broker, and have the same needs as you do. For example, if you have a family of four to insure, talk with people with families and whom they use for a broker.

It is not essential to do it this way, but it can help. Really what you are looking for is a good insurance broker with a good reputation and has experience with your particular situation. Recommendations are always great.

If you can't seem to find someone with recommendations, start with a phone book or Internet search. Talk to a few different brokers to see if you can find someone compatible. Explain your situation and ask for recommendations from each broker. See which one makes the most sense to you. The most important thing is communication. You'll want someone who will be there for you to answer your questions.

Every state keeps a list of insurance brokers, including information on any complaints against them. You can also check online for complaints against any insurance broker. You'll want to do plenty of research to pick the right agent for you.

What To Expect When You Work With A Health Insurance Broker

While working with a health insurance broker, you'll have a lot of decisions to make. The broker will be able to explain all your options to you. Remember to look for a broker that works beyond one set company. A health insurance broker is more valuable to you if you can pick between several different companies. There are many companies offering health insurance, like Blue Cross, Blue Shield, Humana, United Health Care, Aetna and many more. Ask your agent which ones he or she might use in researching health care options for you.

You'll go through probably the more common list of variables that you pick through when finding the right insurance. You might start with the premium, the amount you would pay out each month for health insurance. Your broker should also explain the different deductibles available. This is the amount of money you would pay to cover your medical bills, and the insurance company would start paying after this amount. In general, the lower the deductible, the higher the premium you would pay.

You should also check out the coverage limits. This is probably where the more confusing part of picking a plan comes in. A health insurance broker, however, should probably give a pretty good guesstimate about what amount of insurance you should look into getting. This is the amount that the health insurance will actually pay out. You should look at current risk factors, just as much as unexpected emergencies.

When you have talked with your broker, you'll have your choices explained. Your broker will get a commission off of whichever plan you chose, so this is how your broker is 'paid'. You'll be able to continue to ask questions from your broker after you've chose your plan.

Your broker is also your local representative from the health insurance agent
, in case you need further assistance. While the process can sometimes seem complicated, an agent should be able to explain to you the differences in choices, and make you feel comfortable and confident in your choice. Health insurance is important to have, so you'll want a broker on your side who can help you pick the right coverage for you.

How To Keep Health Insurance Coverage 100%

Only 5% of employers in the U.S. still offer 100% coverage for their employees’ health insurance benefits. Other employers are choosing high copay plans or high deductible plans. Most others are passing their increase in health care costs on to their employees.

Fact: Health Care Premiums are rising faster than workers wages

Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers’ wages (3.7 percent) and the overall inflation rate (2.6 percent), according to the 2007 Employer Health Benefits Survey conducted by the Kaiser Family Foundation and the Health Research and Educational Trust.

The 6.1 percent average increase this year was the slowest rate of premium growth since 1999, when premiums rose 5.3 percent. Since 2001, premiums for family coverage have increased 78 percent, while wages have increased 19 percent and inflation has increased 17 percent.

The average premium for family coverage in 2007 is $12,106. On average, workers now pay $3,281 out of their paychecks to cover their share of the cost of a family policy. While premiums continue to rise faster than wages, this year’s gap of 2.4 percentage points is much smaller than the 10.9 percentage point gap recorded four years ago, when premiums rose 13.9 percent and

wages grew just 3 percent. (Agent Sales Journal Nov. 2007)

Lets Keep it 100% coverage and reduce the premiums

This is a strategy from Easy To Insure Me .com

We will use 2 equations for a 15-employee group: Current and Future Solution

Equation 1 Current

15 employees

(Yearly Premium) $100,000=Health Care

Equation 2 Future Solution

(Yearly Premium) $60,000 + $15,000 (employees x deductibles) = $75,000 maximum exposure

100% coverage and the employer pays for the deductible

while still saving 20% to 40%

**We say maximum exposure because not all employees will satisfy the deductible

Call 215 944 3079 and ask for Chad Levin for more information

Health insurance is a formal agreement to provide and/or pay for medical care. The health insurance policy describes what medical services are "covered" by the insurance company. As a testament to the importance of health insurance in many colleges and universities health insurance is mandatory for all full-time undergraduate and graduate students enrolled in 12 or more credits.

In recent years many small business owners have passed the cost of health care insurance on to their employees. When the employees can not afford the health insurance coverage under present government policy they are just out of luck.

Some colleges have contracted with Aetna Student Health and similar providers to provide a health insurance option. This type of group coverage can be obtained at lower cost. For many families health insurance
is often not affordable or unavailable and health care costs claim a growing share of household budgets. Rising numbers of people are under insured or not insured at all as they just can not afford the insurance premiums.

As medical needs and bills mount many Americans, even those with chronic illnesses, skimp on prescription drugs and needed care, and experience poorly coordinated health care. Hard working citizens lack confidence that they will be able to afford high quality health care in the future.

Shopping for health care insurance is not always easy. Medical terms can be confusing. Before speaking with an insurance agent you should make sure you understand his or her language. Make sure you read an overview of health insurance companies to get a better idea of each provider's identity. Medicare supplement insurance, commonly called Medigap or Medsup insurance, can help make up the difference between Medicare coverage and billed medical costs.

Medical expenses can be very costly, especially for those students entering the United States on a temporary basis. In addition, many health care providers at colleges and universities can deny treatment if a student does not provide appropriate records of international student insurance
coverage.

Medicaid does not pay money to you; instead, it sends payments directly to your health care providers. You may also be asked to pay a small part of the cost (co-payment) for some medical services.

American women want children and are willing to pay for it, but the technology is not sufficiently refined to prevent all multiple gestation. Comparing pre-term birth and infant mortality rates in the US with any other country is truly apples and oranges, and of course, nothing skews longevity statistics like infant death. Some Americans, some reports argue, have too much health insurance. Typical plans cover things that they shouldn't, creating the problem of over use and consumption, leading to higher costs for the insurance providers.

Employers should provide their employees with written notice of their right to continuation coverage both at the beginning of employment and as the employee is going out the door, generally a separate letter dealing with health insurance benefits is best. The notice must instruct the departing employee how to inform the health insurance carrier of the employee's desire to continue coverage.

Employers are jettisoning health insurance because costs are out of control. Since 2001, premiums for family coverage have increased 78 percent, while wages have gone up 19 percent and inflation is up 17 percent.

Obama would require employers to either provide benefits or contribute to a fund that would provide coverage. McCain makes no such rules for employers or individuals. The issue of health insurance coverage and bringing the costs of medical care and services under control should be a prime presidential campaign issue.

The challenge facing American with health care and health care insurance is that the costs have gone beyond the reach of many millions of Americans. The candidate who can meet the challenge of creating a workable health care plan in America should have a major edge in reaching the Whitehouse.

Determining which plan from among all the options companies are offering these days can be a bit overwhelming. If you have looked online at the different choices you can relate. As in anything if you break these plans down, it all starts to bring clarity to what might be important for you or your family. Here are some basic nuts and bolts to look for in a health plan.

Why do I need an Individual or Family Health Insurance Plan?

The bottom line as in all insurance plans is to protect you and or your family from devastating expense should there be an illness or accident requiring medical expense. Many consumers are able to obtain health insurance through employer sponsored group plans and in many instances this may be the best route. However not all employer plans are ideal and as such many are to comprehensive for your entire family making the premiums much higher. Unless the employer covers the entire cost for you and your family you actually be paying a higher premium than you could obtain buying individual health insurance on your own. In other words suppose that you have a fully comprehensive corporate sponsored health plan that is fully funded by your employer. If you then chose to add a family member to that same health insurance plan your employer may not cover any of the cost for those members and in turn you may be grossly overpaying for family health insurance, and should at least do some shopping and compare plans from outside of the corporate sponsored plan to see if you could obtain sufficient coverage for your family for less.

Additionally self employed workers should consider an individual health insurance plans or a family health insurance plan. In recent months many people have lost their jobs, and experienced transitions in the workforce causing many to lose their employer sponsored health insurance leaving both them and their families without crucial coverage. Many cannot afford at the exorbitant cost of a COBRA plan they are offered when the leave an employer and may go unprotected for a few or many months while seeking employment.

Most insurance companies now offer Short Term Medical Insurance also know as Temporary Insurance as an alternative to COBRA these plans can be purchase from 1 to 12 months to cover the in between employment transition time.

How Can I Determine What I Want in a Health Insurance Plan?

There are a few variables to consider when determining what plan will work best to suit your needs. You must determine what features are important and how comprehensive you want your plan to be. Would you prefer a plan that includes co-pays for doctor visits and medications? Would you prefer a plan that pays everything from day one, or a plan that has coverage for a major medical expense but offers low premiums and tax advantages. Let's break this down a little further.

Fully Comprehensive Plans - These plans usually have a choice of deductibles once they are met the insurer will cover the first dollar of all medical expenses these plans are usually considered the Cadillac and will have the most protection for you and your family from day one but will also be reflected in the premium cost.

Co-Pay Insurance Plans - A insurance plan that will pay just a fixed amount of the cost of prescriptions drugs and Doctor Office visits. Some insurance carriers provide a discounted co-pay plan that limits the plan to two Dr office visits per year.

Coinsurance Plans/ Major Medical Insurance - This is a middle of the road plan that typically has a higher deductible of your choice ranging from $1000-$5000 that requires you to pay for all medical expenses until the deductible is met then pay 20% of all treatment and the insurer pay 80%. These plans are only a good choice for those who prefer to exchange a lower premium for covering more of the initial cost of routine medical expenses (co-pays, Dr. Visits) and just want the coverage for any major medical issues or accidents.

Health Savings Accounts (HSA's) - This plan is like a self managed insurance that offers low premiums combined with high deductibles, the insurer pays 100% of expenses after the deductible is met . The insurer sets up a tax sheltered savings account for you where the money can grow tax deferred to use for covering your deductible. The account comes with a debit card to use for office visits and prescriptions. This plan goes with you wherever you go and is owned by you. The premium savings can be huge but it is important to contribute to the plan consistently in order to cover your deductible in the event of a major medical expense. These plans are gaining popularity with self employed and even corporations as an alternative to high insurance cost. The benefits are one deductible per family per year, low premiums, tax savings, and more control over insurance expenditures.

Keep in mind that insurance companies will combine different features of the plans above to offer different ranges of premiums. Most plans will allow for you to choose a coinsurance amount from 0 to 50% where you choose the portion of all medical expenses you will pay after you pay the deductible. Other options are deductibles themselves which range anywhere from $500 to $5000 dollars before the insurance coverage kicks in. Many rider options may be available as well such as a maternity rider, dental, life insurance and the Health Savings Account also offers an Indemnity rider should you have a major medical expense before you have accumulated enough cash in the HSA to cover the deductible.

Where Should I Purchase Health Insurance?

Most any reputable Licensed Agent can help you, most people research rates and options online these days and can run a spreadsheet from most agents' website. You can usually choose what features you want on the plan such as deductibles, co-pays, coinsurance, and plan type this will help you narrow down the options presented to you then work backwards from there.

Regardless of what any agent may tell you the rates are set by the carriers.

You will find the same rates with the same providers everywhere and in fact when you apply online you are actually going direct to the carrier. You should stick with carriers that have a high Rating with A.M. Best or Standard and Poors which rate Insurance companies on the financial strength and ability to pay claims. Avoid companies that offer plans with rates that seem to low compared to other health plans, plans that accept you even if you have serious preexisting conditions or major illnesses, plans that claim to not be regulated by the state and plans that avoid calling the plan insurance. Most importantly do your homework and speak with an agent if you are unsure what plan suits you best.

The United States does not have socialized medical care. If you have no health insurance coverage
, you have to pay for health care out of your own finances at the time of service. This can run into many thousands of dollars for serious illnesses.

You buy health insurance for the same reason you buy other kinds of insurance: to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive.

You cannot predict what your medical bills will be. In a good year, your costs may be low. But if you become ill, your bills could be very high. If you have health insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer.

Many people in the United States are enrolled in some sort of managed care health insurance plan. This is an organized way of both providing services and paying for them. Different types of managed care plans work differently and include preferred provider organizations (PPOs), health maintenance organizations (HMOs), point-of-service (POS) plans and fee-for-service plans.

Individuals enrolled in health care plans pay a monthly or quarterly fee as insurance for the time when they will need medical attention. At the time when a service is provided, the health insurance organization pays part or all of the fee, minimizing the amount you have to pay at the time you receive the service.

The information presented here will help you choose a health insurance plan that is right for you. If you are married or single, have children or no children, this information will help you to find out how to choose a health insurance plan that best meets your needs and your financial circumstances. Definitions of the health insurance terms used are included in the section called Understanding Health Insurance Terms.

Understanding Health Insurance Terms

Coinsurance
The amount you are required to pay for medical care in a fee-for-service plan after you have met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the health insurance company pays 80 percent of the claim, you pay 20 percent.

Coordination of Benefits
A system to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100 percent of the claim.

Co-payment
Another way of sharing medical costs. You pay a flat fee every time you receive a medical service (for example, $5 for every visit to the doctor). The health insurance company pays the rest.

Covered Expenses
Most health insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered services are those medical procedures the insurer agrees to pay for. They are listed in the health insurance policy.

Customary Fee
Most health insurance plans will pay only what they call a reasonable and customary fee for a particular service. If your doctor charges $1,000 for a hernia repair while most doctors in your area charge only $600, you will be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept your health insurance company's payment as full payment. Or shop around to find a doctor who will. Otherwise you will have to pay the rest yourself.

Deductible
The amount of money you must pay each year to cover your medical care expenses before your health insurance policy starts paying.

Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.

HMO (Health Maintenance Organization)
Prepaid health plans. You pay a monthly premium and the HMO covers your doctors' visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy. You must use the doctors and hospitals designated by the HMO.

Managed Care
Ways to manage costs, use, and quality of the health care system. All HMOs and PPOs, and many fee-for-service plans, have managed care.

Maximum Out-of-Pocket Expenses
The most money you will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the health insurance company, in addition to regular premiums.

Non-cancellable Policy
A policy that guarantees you can receive health insurance, as long as you pay the premium. It is also called a guaranteed renewable policy.

PPO (Preferred Provider Organization)
A combination of traditional fee-for-service and an HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered. You can use other doctors, but at a higher cost.

Pre-existing Condition
A health problem that existed before the date your health insurance became effective.

Premium
The amount you or your employer pays in exchange for health insurance coverage. Primary Care Doctor
Usually your first contact for health care. This is often a family physician or internist, but some women use their gynecologist. A primary care doctor monitors your health and diagnoses and treats minor health problems, and refers you to specialists if another level of care is needed. In many health insurance plans, care by specialists is only paid for if your are referred by your primary care doctor. An HMO or a POS plan will provide you with a list of doctors from which you will choose your primary care doctor (usually a family physician, internists, obstetrician-gynecologist, or pedicatrician). This could mean you might have to choose a new primary care doctor if your current one does not belong to the plan. PPOs allow members to use primary care doctors outside the PPO network (at a higher cost). Indemnity plans allow any doctor to be used. Provider
Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides medical care.

Third-Party Payer
Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO, or the Federal Government

The term health insurance is generally used to describe a form of insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.

By estimating the overall risk of healthcare expenses and developing a routine finance structure (such as a monthly premium or annual tax) that will ensure that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization, most often either a government agency or a private or not-for-profit entity operating a health plan.

History and evolution

The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the Peter Chamberlen family. In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance..This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.

Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.

Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case.

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations. The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II.

How it works

A health insurance policy is a contract between an insurance company and an individual. The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health plan are specified in advance, in the member contract or Evidence of Coverage booklet. The individual policy-holder's payment obligations may take several forms:

• Premium: The amount the policy-holder pays to the health plan each month to purchase health coverage.
• Deductible: The amount that the policy-holder must pay out-of-pocket before the health plan pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health plan. It may take several doctor's visits or prescription refills before the policy-holder reaches the deductible and the health plan starts to pay for care.
• Copayment: The amount that the policy-holder must pay out of pocket before the health plan pays for a particular visit or service. For example, a policy-holder might pay a $45 copayment for a doctor's visit, or to obtain a prescription. A copayment must be paid each time a particular service is obtained.
• Coinsurance: Instead of paying a fixed amount up front (a copayment), the policy-holder must pay a percentage of the total cost. For example, the member might have to pay 20% of the cost of a surgery, while the health plan pays the other 80%. Because there is no upper limit on coinsurance, the policy-holder can end up owing very little, or a significant amount, depending on the actual costs of the services they obtain.
• Exclusions: Not all services are covered. The policy-holder is generally expected to pay the full cost of non-covered services out of their own pocket.
• Coverage limits: Some health plans only pay for health care up to a certain dollar amount. The policy-holder may be expected to pay any charges in excess of the health plan's maximum payment for a specific service. In addition, some plans have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
• Out-of-pocket maximums: Similar to coverage limits, except that in this case, the member's payment obligation ends when they reach the out-of-pocket maximum, and the health plan pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
• Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer.
• In-Network Provider: A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or copayments, or additional benefits, to a plan member to see an in-network provider. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the "usual and customary" charges the insurer pays to out-of-network providers.

Prescription drug plans are a form of insurance offered through some employer benefit plans in the US, where the patient pays a copayment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan.

Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.

Health plan vs. health insurance

Historically, HMOs tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.) The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission (concurrent utilization review).

Comprehensive vs. scheduled

Comprehensive health insurance pays a percentage of the cost of hospital and physician charges after a deductible (usually applies to hospital charges) or a co-pay (usually applies to physician charges, but may apply to some hospital services) is met by the insured. These plans are generally expensive because of the high potential benefit payout — $1,000,000 to 5,000,000 is common — and because of the vast array of covered benefits.

Scheduled health insurance plans are not meant to replace a traditional comprehensive health insurance plans and are more of a basic policy providing access to day-to-day health care such as going to the doctor or getting a prescription drug. In recent years, these plans have taken the name mini-med plans or association plans. These plans may provide benefits for hospitalization and surgical, but these benefits will be limited. Scheduled plans are not meant to be effective for catastrophic events. These plans cost much less than comprehensive health insurance. They generally pay limited benefits amounts directly to the service provider, and payments are based upon the plan's "schedule of benefits". Annual benefits maximums for a typical scheduled health insurance plan may range from $1,000 to $25,000.

Inherent problems with insurance

Insurance systems must typically deal with two inherent challenges: adverse selection, which affects any voluntary system, and ex-post moral hazard, which affects any insurance system in which a third party bears major responsibility for payment, whether that is an employer or the government. Some national systems with compulsory insurance utilize systems such as risk equalization and community rating to overcome these inherent problems.

Adverse selection

Insurance companies use the term "adverse selection" to describe the tendency for only those who will benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills. On the other side, people who consider themselves to be reasonably healthy may decide that medical insurance is an unnecessary expense; if they see the doctor once a year and it costs $250, that's much better than making monthly insurance payments of $40. (example figures).

The fundamental concept of insurance is that it balances costs across a large, random sample of individuals (see risk pool). For instance, an insurance company has a pool of 1000 randomly selected subscribers, each paying $100 per month. One person becomes very ill while the others stay healthy, allowing the insurance company to use the money paid by the healthy people to pay for the treatment costs of the sick person. However, when the pool is self-selecting rather than random, as is the case with individuals seeking to purchase health insurance directly, adverse selection is a greater concern. A disproportionate share of health care spending is attributable to individuals with high health care costs. In the US the 1% of the population with the highest spending accounted for 27% of aggregate health care spending in 1996. The highest-spending 5% of the population accounted for more than half of all spending. These patterns were stable through the 1970s and 1980s, and some data suggest that they may have been typical of the mid-to-early 20th century as well. A few individuals have extremely high medical expenses, in extreme cases totaling a half million dollars or more. Adverse selection could leave an insurance company with primarily sick subscribers and no way to balance out the cost of their medical expenses with a large number of healthy subscribers.

Because of adverse selection, insurance companies employ medical underwriting, using a patient's medical history to screen out those whose pre-existing medical conditions pose too great a risk for the risk pool. Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, whether the person has been treated for any of a long list of diseases and so on. In general, those who present large financial burdens are denied coverage or charged high premiums to compensate. One large US industry survey found that roughly 13 percent of applicants for comprehensive, individually purchased health insurance who went through the medical underwriting in 2004 were denied coverage. Declination rates increased significantly with age, rising from 5 percent for individuals 18 and under to just under a third for individuals aged 60 to 64. Among those who were offered coverage, the study found that 76% received offers at standard premium rates, and 22% were offered higher rates. On the other side, applicants can get discounts if they do not smoke and are healthy.

Moral hazard

Moral hazard occurs when an insurer and a consumer enter into a contract under symmetric information, but one party takes action, not taken into account in the contract, which changes the value of the insurance. A common example of moral hazard is third-party payment—when the parties involved in making a decision are not responsible for bearing costs arising from the decision. An example is where doctors and insured patients agree to extra tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice suits, and patients benefit by gaining increased certainty of their medical condition. The cost of these extra tests is borne by the insurance company, which may have had little say in the decision. Co-payments, deductibles, and less generous insurance for services with more elastic demand attempt to combat moral hazard, as they hold the consumer responsible.

Other factors affecting insurance prices

A recent study by PriceWaterhouseCoopers examining the drivers of rising health care costs in the US pointed to increased utilization created by increased consumer demand, new treatments, and more intensive diagnostic testing, as the most significant driver. People in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more intensive medical care than a young healthier population. Advances in medicine and medical technology can also increase the cost of medical treatment. Lifestyle-related factors can increase utilization and therefore insurance prices, such as: increases in obesity caused by insufficient exercise and unhealthy food choices; excessive alcohol use, smoking, and use of street drugs. Other factors noted by the PWC study included the movement to broader-access plans, higher-priced technologies, and cost-shifting from Medicaid and the uninsured to private payers.

Health insurance in Australia

The public health system is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy.

The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds. The Coalition Howard government had announced that Medibank would be privatised if it won the 2007 election, however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership.

Some private health insurers are 'for profit' enterprises, and some are non-profit organizations such as HCF Health Insurance. Some have membership restricted to particular groups, but the majority have open membership.

Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.

The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover below). Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance. Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises, and a vicious cycle would ensue.

There are a number of other matters about which funds are not permitted to discriminate between members in terms of premiums, benefits or membership - these include racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.

The Australian government has introduced a number of incentives to encourage adults to take out private hospital insurance. These include:

• Lifetime Health Cover: If a person has not taken out private hospital cover by the 1st July after their 30th birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.
• Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (currently $70,000 for singles and $140,000 for couples) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment - rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.
• The Australian government announced in May 2008 that it proposes to increase the thresholds, to $100,000 for singles and $150,000 for families. These changes require legislative approval. A bill to change the law has been introduced but was not passed by the Senate. A changed version was passed on 16 October 2008. There have been criticisms that the changes will cause many people to drop their private health insurance, causing a further burden on the public hospital system, and a rise in premiums for those who stay with the private system. Other commentators believe the effect will be minimal.
• Private Health Insurance Rebate: The government subsidises the premiums for all private health insurance cover, including hospital and ancillary (extras), by 30%, 35% or 40%.

Health insurance in Canada

Most health insurance in Canada is administered by each province, under the Canada Health Act, which requires all people to have free access to basic health services. Collectively, the public provincial health insurance systems in Canada are frequently referred to as Medicare. Private health insurance is allowed, but the provincial governments allow it only for services that the public health plans do not cover; for example, semi-private or private rooms in hospitals and prescription drug plans. Canadians are free to use private insurance for elective medical services such as laser vision correction surgery, cosmetic surgery, and other non-basic medical procedures. Some 65% of Canadians have some form of supplementary private health insurance; many of them receive it through their employers. Private-sector services not paid for by the government account for nearly 30 percent of total health care spending.

In 2005, the Supreme Court of Quebec ruled, in Chaoulli v. Quebec, that the province's prohibition on private insurance for health care already insured by the provincial plan could constitute an infringement of the right to life and security if there were long wait times for treatment as happened in this case. Certain other provinces have legislation which financially discourages but does not forbid private health insurance in areas covered by the public plans. The ruling has not changed the overall pattern of health insurance across Canada but has spurred on attempts to tackle the core issues of supply and demand and the impact of wait times.

Health insurance in France

The French model of health insurance has led to the World Health Organisation to rank French health care the best in the world, because it permits a high quality of care and nearly total patient freedom. The national system of health insurance was instituted in 1945, just after the end of the Second World War. It was a compromise between Gaullist and Communist representatives in the French parliament. The Conservative Gaullists were opposed to a state-run healthcare system, while the Communists were supportive of a complete nationalisation of health care along a British Beveridge model.

The resulting programme was profession-based : all people working were required to pay a portion of their income to a health insurance fund, which mutualised the risk of illness, and which reimbursed medical expenses at varying rates. Children and spouses of insured people were eligible for benefits, as well. Each fund was free to manage its own budget and reimburse medical expenses at the rate it saw fit.

The government has two responsabilities in this system.

• The first government responsability is the fixing of the rate at which medical expenses should be negotiated, and it does this in two ways: The Ministry of Health directly negociates prices of medicine with the manufacturers, based on the average price of sale observed in neighboring countries. A board of doctors and experts decides if the medicine provides a valuable enough medical benefit to be reimbursed (note that most medicine is reimbursed, including homeopathy). In parallel, the government fixes the reimbursment rate for medical services : this means that a doctor is free to charge the fee that he wishes for a consultation or an examination, but the social security system will only reimburse it at a pre-set rate. These tariffs are set annually through negociation with doctors' representative organisations.
• The second government responsability is oversight of the health-insurance funds, to insure that they are correctly managing the sums they receive, and to ensure oversight of the public hospital network.

Today, this system is more-or-less intact. All citizens and legal foreign residents of France are covered by one of these mandatory programs, which continue to be funded by worker participation. However, since 1945, a number of major changes have been introduced. Firstly, the different health-care funds (there are five : General, Independant, Agricultural, Student, Public Servants) now all reimburse at the same rate. Secondly, since 2000, the government now provides health care to those who are not covered by a mandatory regime (those who have never worked and who are not students, meaning the very rich or the very poor). This regime, unlike the worker-financed ones, is financed via general taxation and reimburses at a higher rate than the profession-based system for those who cannot afford to make up the difference. Finally, to counter the rise in health-care costs, the government has installed two plans, (in 2004 and 2006), which require insured people to declare a referring doctor in order to be fully reimbursed for specalist visits, and which installed a mandatory co-pay of 1 € (about $1.45) for a doctor visit, 0,50 € (about 80 ¢) for each box of medicine prescribed, and a fee of 16-18 € (20-25 $) per day for hospital stays and for expensive proceedures.

An important element of the French insurance system is solidarity : the more ill a person becomes, the less they pay. This means that for people with serious or chronic illnesses, the insurance system reimburses them 100 % of expenses, and waives their co-pay charges.

Finally, for fees that the mandatory system does not cover, there is a large range of private complementary insurance plans available. The market for these programs is very competitive, and often subsidised by the employer, which means that premiums are usually modest. 85% of French people benefit from complementary private health insurance.

Health insurance in the Netherlands

In 2006, a new system of health insurance came into force in the Netherlands. This new system avoids the two pitfalls of adverse selection and moral hazard associated with traditional forms of health insurance by using a combination of regulation and an insurance equalization pool. Moral hazard is avoided by mandating that insurance companies provide at least one policy which meets a government set minimum standard level of coverage, and all adult residents are obliged by law to purchase this coverage from an insurance company of their choice. All insurance companies receive funds from the equalization pool to help cover the cost of this government-mandated coverage. This pool is run by a regulator which collects salary-based contributions from employers, which make up about 50% of all health care funding, and funding from the government to cover people who cannot afford health care, which makes up an additional 5%.

The remaining 45% of health care funding comes from insurance premiums paid by the public, for which companies compete on price, though the variation between the various competing insurers is only about 5%. However, insurance companies are free to sell additional policies to provide coverage beyond the national minimum. These policies do not receive funding from the equalization pool, but cover additional treatments, such as dental procedures and physiotherapy, which are not paid for by the mandatory policy.

Funding from the equalization pool is distributed to insurance companies for each person they insure under the required policy. However, high-risk individuals get more from the pool, and low-income persons and children under 18 have their insurance paid for entirely. Because of this, insurance companies no longer find insuring high risk individuals an unappealing proposition, avoiding the potential problem of adverse selection.

Insurance companies are not allowed to have co-payments, caps, or deductibles, or to deny coverage to any person applying for a policy, or to charge anything other than their nationally set and published standard premiums. Therefore, every person buying insurance will pay the same price as everyone else buying the same policy, and every person will get at least the minimum level of coverage.

Health insurance in the United Kingdom

The UK's National Health Service (NHS) is a publicly funded healthcare system that provides coverage to everyone normally resident in the UK. It is not strictly insurance system because (a) there are no premiums collected, (b) costs are not charged at the patient level and (c) costs are not pre-paid from a pool. However, it does achieve the main aim of insurance which is to spread financial risk arising from ill-health. The costs of running the NHS (est. £104 billion in 2007-8) are met directly from general taxation.

Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services.

The NHS provides the majority of health care in the UK, including primary care, in-patient care, long-term health care, ophthalmology and dentistry. Recently the private sector has been increasingly used to increase NHS capacity despite a large proportion of the British public opposing such involvement.. According to the World Health Organization, government funding covered 86% of overall health care expenditures in the UK as of 2004, with private expenditures covering the remaining 14%.

Health insurance in the United States

The US market-based health care system relies heavily on private and not-for-profit health insurance, which is the primary source of coverage for most Americans. According to the United States Census Bureau, approximately 84% of Americans have health insurance; some 60% obtain it through an employer, while about 9% purchase it directly. Various government agencies provide coverage to about 27% of Americans (there is some overlap in these figures).

Public programs provide the primary source of coverage for most seniors and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals, Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families, and SCHIP, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals.

In 2006, there were 47 million people in the United States (16% of the population) who were without health insurance for at least part of that year. About 37% of the uninsured live in households with an income over $50,000.

In 2004, US health insurers directly employed almost 470,000 people at an average salary of $61,409. (As of the fourth quarter of 2007, the total US labor force stood at 153.6 million, of whom 146.3 million were employed. Employment related to all forms of insurance totaled 2.3 million. Mean annual earnings for full-time civilian workers as of June 2006 were $41,231; median earnings were $33,634.) The insurance industry also represents a significant lobbying group in the US. For the 2007-2008 election cycle insurance was the 8th among industries in political contributions to members of Congress, giving $13,411,561, of which 56% was given to Democrats (lawyers and law firms were number 1, giving $59,205,616, of which 80% went to Democrats). The top recipient of insurance industry contributions was Senator Christopher Dodd (D-CT). The leading contributor from the insurance industry — as measured by total political contributions — was AFLAC, Inc., which contributed $907,150 in 2007..

In 1948, the World Health Assembly defined health as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”  This definition is still widely referenced, but is often supplemented by other World Health Organization (WHO) reports such as the Ottawa Charter for Health Promotion which in 1986 stated that health is “a resource for everyday life, not the objective of living. Health is a positive concept emphasizing social and personal resources, as well as physical capacities.”

Classification systems describe heath. The WHO’s Family of International Classifications (WHO-FIC) is comprised of the International Classification of Functioning, Disability and Health (ICF) and the International Classification of Diseases (ICD).

Aspects of health

Physical health

Physical fitness is good bodily health, and is the result of regular exercise, proper diet and nutrition, and proper rest for physical recovery.

A strong indicator of the health of localized population is their height|weight, which generally increases with improved nutrition and health care. This is also influenced by the standard of living and quality of life. Genetics also plays a major role in people's height. The study of human growth, its regulators, and implications is known as Auxology.

Mental health

Mental health refers to an individual's emotional and psychological well-being. Merriam-Webster defines mental health as "A state of emotional and psychological well-being in which an individual is able to use his or her cognitive and emotional capabilities, function in society, and meet the ordinary demands of everyday life."

According to the World Health Organization, there is no single "official" definition of mental health. Cultural differences, subjective assessments, and competing professional theories all affect how "mental health" is defined. In general, most experts agree that "mental health" and "mental illness" are not opposites. In other words, the absence of a recognized mental disorder is not necessarily an indicator of sound mental health.

One way to think about mental health is by looking at how effectively and successfully a person functions. Feeling capable and competent; being able to handle normal levels of stress, maintain satisfying relationships, and lead an independent life; and being able to "bounce back," or recover from difficult situations, are all signs of mental health.

A combination of physical, emotional, social and most importantly mental well-being is necessary to achieve overall health.

Determinants of health

The LaLonde report suggested that there are four general determinants of health including human biology, environment, lifestyle, and healthcare services. Thus, health is maintained and improved not only through the advancement and application of health science, but also through the efforts and intelligent lifestyle choices of the individual and society.

A major environmental factor is water quality, especially for the health of infants and children in developing countries.

Studies show that in developed countries, the lack of neighborhood recreational space that includes the natural environment leads to lower levels of neighborhood satisfaction and higher levels of obesity; therefore, lower overall well being. Therefore, the positive phsychological benefits of natural space in urban neighborhoods should be taken into account in public policy and land use.

Health maintenance

Achieving health and remaining healthy is an active process. Effective strategies for staying healthy and improving one's health include the following elements:

Nutrition

Nutrition is the science that studies how people eat affects their health and performance, such as foods or food components that cause diseases or deteriorate health (such as eating too many calories, which is a major contributing factor to obesity, diabetes, and heart disease). The field of nutrition also studies foods and dietary supplements that improve performance, promote health, and cure or prevent disease, such as eating fibrous foods to reduce the risk of colon cancer, or supplementing with vitamin C to strengthen teeth and gums and to improve the immune system.

Personal health depends partially on the social structure of one’s life. The maintenance of strong social relationships is linked to good health conditions, longevity, productivity, and a positive attitude. This is due to the fact that positive social interaction as viewed by the participant increases many chemical levels in the brain which are linked to personality and intelligence traits. Essentially this means that positive reinforcement from a third party make one more socially adept, in control, and relaxed physically and mentally, all of which are proven to effect the nervous system(UHF).

Sports nutrition

Sports nutrition focuses the link between dietary supplements and athletic performance. One goal of sports nutrition is to maintain glycogen levels and prevent glycogen depletion. Another is to optimize energy levels and muscle tone. An athlete's strategy for winning an event may include a schedule for the entire season of what to eat, when to eat it, and in what precise quantities (before, during, after, and between workouts and events). Participants in endurance sports such as the full-distance triathlon actually eat during their races. Sports nutrition works hand-in-hand with sports medicine.

Exercise

Exercise is the performance of movements in order to develop or maintain physical fitness and overall health. It is often directed toward also honing athletic ability or skill. Frequent and regular physical exercise is an important component to prevention of some of the diseases of affluence such as cancer, heart disease, cardiovascular disease, Type 2 diabetes, obesity and back pain.

Exercises are generally grouped into three types depending on the overall effect they have on the human body:

• Flexibility exercises such as stretching improve the range of motion of muscles and joints.
• Aerobic exercises such as walking and running focus on increasing cardiovascular endurance and muscle density.
• Anaerobic exercises such as weight training or sprinting increase muscle mass and strength.

Physical exercise is considered important for maintaining physical fitness including healthy weight; building and maintaining healthy bones, muscles, and joints; promoting physiological well-being; reducing surgical risks; and strengthening the immune system.

Proper nutrition is just as, if not more, important to health as exercise. When exercising it becomes even more important to have good diet to ensure the body has the correct ratio of macronutrients whilst providing ample micronutrients; this is to aid the body with the recovery process following strenuous exercise. When the body falls short of proper nutrition, it gets into starvation mode developed through evolution and depends onto fat content for survival. Research suggest that the production of thyroid hormones can be negatively affected by repeated bouts of dieting and calorie restriction. Proper rest and recovery is also as important to health as exercise, otherwise the body exists in a permanently injured state and will not improve or adapt adequately to the exercise.

The above two factors can be compromised by psychological compulsions (eating disorders such as exercise bulimia, anorexia, and other bulimias), misinformation, a lack of organization, or a lack of motivation. These all lead to a decreased state of health.

Delayed Onset Muscle Soreness can occur after any exercise, particularly if the body is in an unconditioned state relative to that exercise and the exercise involves repetitive eccentric contractions.

Hygiene

Hygiene is the practice of keeping the body clean to prevent infection and illness, and the avoidance of contact with infectious agents. Hygiene practices include bathing, brushing and flossing teeth, washing hands especially before eating, washing food before it is eaten, cleaning food preparation utensils and surfaces before and after preparing meals, and many others. This may help prevent infection and illness. By cleaning the body, dead skin cells are washed away with the germs, reducing their chance of entering the body.

Stress management

Prolonged psychological stress may negatively impact health, such as by weakening the immune system. See negative effects of the fight-or-flight response. Stress management is the application of methods to either reduce stress or increase tolerance to stress. Certain nootropics do both. Exercising to improve physical fitness, especially cardiovascular fitness, boosts the immune system and increases stress tolerance. Relaxation techniques are physical methods used to relieve stress. Examples include progressive relaxation and fractional relaxation. Psychological methods include cognitive therapy, meditation, and positive thinking which work by reducing response to stress. Improving relevant skills and abilities builds confidence, which also reduces the stress reaction to situations where those skills are applicable. Reducing uncertainty, by increasing knowledge and experience related to stress-causing situations, has the same effect. Learning to cope with problems better, such as improving problem solving and time management skills, may also reduce stressful reaction to problems. Repeatedly facing an object of one's fears may also desensitize the fight-or-flight response with respect to that stimulus -- e.g., facing bullies may reduce fear of bullies.

Health care

Health care is the prevention, treatment, and management of illness and the preservation of mental and physical well being through the services offered by the medical, nursing, and allied health professions. According to the World Health Organization, health care embraces all the goods and services designed to promote health, including “preventive, curative and palliative interventions, whether directed to individuals or to populations”. The organized provision of such services may constitute a health care system. This can include a specific governmental organization such as the National Health Service in the UK, or a cooperation across the National Health Service and Social Services as in Shared Care.

Workplace wellness programs

Workplace wellness programs are recognized by an increasingly large number of companies for their value in improving the health and well-being of their employees, and for increasing morale, loyalty, and productivity. Workplace wellness programs can include things like onsite fitness centers, health presentations, wellness newsletters, access to health coaching, tobacco cessation programs and training related to nutrition, weight and stress management. Other programs may include health risk assessments, health screenings and body mass index monitoring. Mostly overseen or not mentioned is a group of determinants of health which could be called coincidence, hazard, luck or bad luck. These factors are quite important determinants of health but difficult to calculate.

Public health

Public health is "the science and art of preventing disease, prolonging life and promoting health through the organised efforts and informed choices of society, organizations, public and private, communities and individuals." It is concerned with threats to the overall health of a community based on population health analysis. The population in question can be as small as a handful of people or as large as all the inhabitants of several continents (for instance, in the case of a pandemic). Public health has many sub-fields, but is typically divided into the categories of epidemiology, biostatistics and health services. Environmental, social and behavioral health, and occupational health, are also important fields in public health.

The focus of public health intervention is to prevent rather than treat a disease through surveillance of cases and the promotion of healthy behaviors. In addition to these activities, in many cases treating a disease can be vital to preventing it in others, such as during an outbreak of an infectious disease. Vaccination programs and distribution of condoms are examples of public health measures.

Role of science in health

Health science is the branch of science focused on health, and it includes many subdisciplines. There are two approaches to health science: the study and research of the human body and health-related issues to understand how humans (and animals) function, and the application of that knowledge to improve health and to prevent and cure diseases.

Where health knowledge comes from

Health research builds primarily on the basic sciences of biology, chemistry, and physics as well as a variety of multidisciplinary fields (for example medical sociology). Some of the other primarily research-oriented fields that make exceptionally significant contributions to health science are biochemistry, epidemiology, and genetics.

Putting health knowledge to use

Applied health sciences also endeavor to better understand health, but in addition they try to directly improve it. Some of these are: biomedical engineering, biotechnology, nursing, nutrition, pharmacology, pharmacy, public health (see below), psychology, physical therapy, and medicine. The provision of services to maintain or improve people's health is referred to as health care (see above).

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 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

Commercially insurable risks typically share seven common characteristics.

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. 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. (See the U.S. Financial Accounting Standards Board standard number 113)
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.

Indemnification

The technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of" policy. The difference is significant on paper, but rarely material in practice.

An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; for example, a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000).

Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language.

An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.

Insurers' business model

Profit = earned premium + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insured parties.

The most complicated aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are losers (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income).

An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss.

Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out.

In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle.

Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the United States, due to natural catastrophes, have exacerbated this trend.

Finally, claims and loss handling is the materialized utility of insurance. In managing the claims-handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome.

History of insurance

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.

Achaemenian monarchs of Iran were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."

A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes.

The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional Federal Charter (OFC)) for insurance similar to that which oversees state banks and national banks.

Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.

Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owner's policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.

Auto insurance

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: (1) Property coverage pays for damage to or theft of your car. (2) Liability coverage pays for your legal responsibility to others for bodily injury or property damage. and (3) Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.

Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

Home insurance

What is homeowners insurance?

Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.

Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility.

Health

Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance. Most countries rely on public funding to ensure that all citizens have universal access to health care.

Disability

• Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.
• Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
• Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.
• Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a job-related injury.

Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property.

• Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.
• Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

Life

Life insurance provides a monetary benefit to a descedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.

In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.

Property

Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.

• Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars.
• Driving School Insurance insurance provides cover for any authorized driver whilst undergoing tuition, cover also unlike other motor policies provides cover for instructor liability where both the pupil and driving instructor are equally liable in the event of a claim.
• Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.
• Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
• Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.
• Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."
• Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake damage. Most earthquake insurance policies feature a high deductible. Rates depend on location and the probability of an earthquake, as well as the construction of the home.
• A fidelity bond is a form of casualty insurance that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
• Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some portions of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.
• Home insurance or homeowners' insurance: See "Property insurance".
• Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
• Surety bond insurance is a three party insurance guaranteeing the performance of the principal.
• Terrorism insurance provides protection against any loss or damage caused by terrorist activities.
• Volcano insurance is an insurance that covers volcano damage in Hawaii.
• Windstorm insurance is an insurance covering the damage that can be caused by hurricanes and tropical cyclones.

Liability

Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.

• Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
• Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".
• Professional liability insurance, also called professional indemnity insurance, protects insured professionals such as architectural corporation and medical practice against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, home inspectors, appraisers, and website developers.
• Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes made by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.
• Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.

Credit

Credit insurance repays some or all of a loan when certain things happen to the borrower such as unemployment, disability, or death.

• Mortgage insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.

Other types

• Collateral protection insurance or CPI, insures property (primarily vehicles) held as collateral for loans made by lending institutions.
• Defense Base Act Workers' compensation or DBA Insurance provides coverage for civilian workers hired by the government to perform contracts outside the U.S. and Canada. DBA is required for all U.S. citizens, U.S. residents, U.S. Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.
• Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.
• Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase coverage to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.
• Kidnap and ransom insurance
• Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.
• Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. See the Nuclear exclusion clause and for the United States the Price-Anderson Nuclear Industries Indemnity Act)
• Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.
• Pollution Insurance, which consists of first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded.
• Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.
• Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.
• Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, loss of personal belongings, travel delay, personal liabilities, etc.

Insurance financing vehicles

• Protected Self-Insurance is an alternative risk financing mechanism in which an organization retains the mathematically calculated cost of risk within the organization and transfers the catastrophic risk with specific and aggregate limits to an insurer so the maximum total cost of the program is known. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.
• Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium × tax multiplier. Numerous variations of this formula have been developed and are in use.
• Fraternal insurance is provided on a cooperative basis by fraternal benefit societies or other social organizations.
• Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
• No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.
• Reinsurance is a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than to transfer insurance risk.
• Stop-loss insurance provides protection against catastrophic or unpredictable losses. It is purchased by organizations who do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles.
• Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that requires participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):
• Social welfare provision
• Social security
• Social safety net
• National Insurance
• Social Security (United States)
• Social Security debate (United States)

Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts.

In the United Kingdom, The Crown (which, for practical purposes, meant the Civil service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether.

Insurance companies

Insurance companies may be classified into two groups:

• Life insurance companies, which sell life insurance, annuities and pensions products.
• Non-life, General, or Property/Casualty insurance companies, which sell other types of insurance.

General insurance companies can be further divided into these sub categories.

• Standard Lines
• Excess Lines

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature — coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.

In the United States, standard line insurance companies are "main stream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.

Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers.

Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyds organizations.

Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.

Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well.

Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.

The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.

Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:

• heavy and increasing premium costs in almost every line of coverage;
• difficulties in insuring certain types of fortuitous risk;
• differential coverage standards in various parts of the world;
• rating structures which reflect market trends rather than individual loss experience;
• insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.

The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.

Global insurance industry

Global insurance premiums grew by 8.0% in 2006 (or 5% in real terms) to reach $3.7 trillion due to improved profitability and a benign economic environment characterised by solid economic growth, moderate inflation and strong equity markets. Profitability improved in both life and non-life insurance in 2006 compared to the previous year. Life insurance premiums grew by 10.2% in 2006 as demand for annuity and pension products rose. Non-life insurance premiums grew by 5.0% due to growth in premium rates. Over the past decade, global insurance premiums rose by more than a half as annual growth fluctuated between 2% and 11%.

Advanced economies account for the bulk of global insurance. With premium income of $1,485bn, Europe was the most important region, followed by North America ($1,258bn) and Asia ($801bn). The top four countries accounted for nearly two-thirds of premiums in 2006. The U.S. and Japan alone accounted for 43% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums. The volume of UK insurance business totalled $418bn in 2006 or 11.2% of global premiums.

Controversies
Insurance insulates too much

By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.

For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider were so irrational as to want to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.

Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold.

Many institutional insurance purchasers buy insurance through an insurance broker. Brokers represent the buyer (not the insurance company), and typically counsel the buyer on appropriate coverage and policy limitations. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible.

Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company.

Redlining

Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.

All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available.

In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used.

An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination.

What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).

Insurance patents

New insurance products can now be protected from copying with a business method patent in the United States.

A recent example of a new insurance product that is patented is Usage Based auto insurance. Early versions were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134 ) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009).

Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area. One such example is titled "Method of Expediting Insurance Claims" Patent 7,203,654 issued April 10, 2007.

Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp.

There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006.

Inventors can now have their insurance U.S. patent applications reviewed by the public in the Peer to Patent program.

The insurance industry and rent seeking

Certain insurance products and practices have been described as rent seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.

Criticism of insurance companies

Some people believe that modern insurance companies are money-making businesses which have little interest in insurance. They argue that the purpose of insurance is to spread risk so the reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs counter to the principle of insurance.

Other criticisms include:

• Insurance policies contain too many exclusion clauses. For example, some house insurance policies do not cover damage to garden walls.
• Many insurance companies now use call centres and staff attempt to answer questions by reading from a script. It is difficult to speak to anybody with expert knowledge. While policyholders find their premium payments decrease when dealing with companies who sacrifice the use of trained insurance agents, they also risk greater financial loss due to inadequate coverage protection. Those companies who invest in educated insurance agents provide a valued service to the community. Policyholders who work with knowledgeable insurance agents are more likely to identify needs, evaluate options, purchase sufficient insurance protection, and minimize the risk of heavy financial loss for themselves and their family.

Glossary

• 'Combined ratio' = loss ratio + expense ratio. Loss ratio is calculated by dividing the amount of losses (sometimes including loss adjustment expenses) by the amount of earned premium. Expense ratio is calculated by dividing the amount of operational expenses by the amount of written premium. A lower number indicates a better return on the amount of capital placed at risk by an insurer.
• 'SSA' = subscriber savings account.
• 'AIF' = attorney in fact.
   

ALL ABOUT ORANGE COUNTY

Orange County is a county in Southern California, United States. Its county seat is Santa Ana. According to the 2000 Census, its population was 2,846,289, making it the second most populous county in the state of California, and the fifth most populous in the United States. The state of California estimates its population as of 2008 to be 3,121,251 people, dropping its rank to third, behind San Diego County.[1] Whereas most population centers in the United States tend to be identified by a major city, Orange County residents take their county name as their label of cultural identity. There is no defined urban center to Orange County as there generally is in other areas with one dominant municipal entity. It is almost uniformly suburban, except for some older urban areas such as downtown Santa Ana. Five Orange County cities have populations exceeding 170,000. It is also a famous tourist destination, as the county is home to such attractions as Disneyland and Knott's Berry Farm. It is often portrayed in the media as an affluent and politically powerful region. It is at the center of Southern California's Tech Coast, with Irvine being the primary business hub. Thirty-four incorporated cities are located in Orange County; the newest is Aliso Viejo, with Anaheim being the oldest. According to The Wall Street Journal, in 2005, Orange county was the second most expensive housing market in the United States with a median home price of $650,000.

History

Members of the Tongva and Juane�o/Luise�o nations long inhabited the area. After the 1769 expedition of Gaspar de Portol�, a Spanish expedition led by Junipero Serra named the area Valle de Santa Ana (Valley of Saint Anne). On November 1, 1776, Mission San Juan Capistrano became the area's first permanent European settlement. Among the group of explorers that came with Portol� were Jos� Manuel Nieto and Jos� Antonio Yorba. Both of these men were given land grants and their heirs also inherited portions of family land. The oldest of the Orange County land grants or ranchos was Rancho Santiago de Santa Ana granted in 1810 by Ferdinand VII of Spain. The Yorba heirs Bernardo and Teodosio Yorba inherited ranches in 1834 and 1846 respectively. Their ranches were known as Rancho Ca��n de Santa Ana (Santa Ana Canyon Ranch) and Rancho Lomas de Santiago.The Nieto heirs Juan Jos� and Antonio Nieto were granted land in 1834. The Nieto ranches were known as Rancho Los Alamitos, Rancho Las Bolsas, and Rancho Los Coyotes. Other ranches in Orange County were granted by the Mexican government post 1821, year of Mexican Independence, during the Mexican period in Alta California.

A severe drought in the 1860s devastated the prevailing industry, cattle ranching, and much land came into the possession of Richard O'Neill, Sr.,[3] James Irvine and other land barons. In 1887, silver was discovered in the Santa Ana Mountains, attracting settlers via the Santa Fe and Southern Pacific Railroads. This growth led the California legislature to divide Los Angeles County and create Orange County as a separate political entity on March 11, 1889. It was named for its most famous product (However, there was already a town by the name of Orange, California that was not named for the fruit, but rather for Orange County, Virginia), but other citrus crops, avocados, and oil extraction were also important to the early economy.

Orange County benefited from the July 4, 1904 completion of the Pacific Electric Railway, a trolley connecting Los Angeles with Santa Ana and Newport Beach . The link made Orange County an accessible weekend retreat for celebrities of early Hollywood. It was deemed so significant that the city of Pacific City changed its name to Huntington Beach in honor of Henry Huntington, president of the Pacific Electric and nephew of robber baron Collis Huntington. Transportation further improved with the completion of the State Route and U.S. Route 101 (now mostly Interstate 5) in the 1920s.

Agriculture, such as the boysenberry which was made famous by Buena Park native Walter Knott, began to decline after World War II but the county's prosperity soared. The completion of Interstate 5 in 1954 helped make Orange County a bedroom community for many who moved to Southern California to work in aerospace and manufacturing. Orange County received a further boost in 1955 with the opening of Disneyland.

In 1969, Yorba Linda-born Orange County native Richard Nixon became the 37th President of the United States.

In the 1980s, the population topped two million for the first time; Orange County had become the second-most populated county in California.

A spectacular investment fund melt-down in 1994 led to the criminal prosecution of County of Orange treasurer Robert Citron. The county lost at least $1.5 billion through high-risk investments in derivatives.[5] On December 6, 1994, the County of Orange declared Chapter 9 bankruptcy,[5] from which it emerged in June 1995. The Orange County bankruptcy was the largest municipal bankruptcy in U.S. history.

In recent years, the county has been characterized by conflict between the older more historic northern and newer southern cities over development, the building of new toll roads, and a recently defeated proposal to build an international airport at the former El Toro Marine Corps Air Station that would have reduced operations at the existing John Wayne Airport.

In 2005, a few months after the California Lottery joined the multi-state Mega Millions lottery game, a ticket sold in Anaheim that was shared by seven people won a jackpot worth $315 million, the first time Mega Millions was won in the state. The group chose the $180 million cash option.

Geography

According to the U.S. Census Bureau, the county has a total area of 2,455 km� (948 sq mi), making it the smallest county in Southern California. Surface water accounts for 411 km� (159 sq mi) of the area, 16.73% of the total; 2,045 km� (789 sq mi) of it is land. Orange County is bordered on the southwest by the Pacific Ocean, on the north by Los Angeles County, on the northeast by San Bernardino County, on the northeast by Riverside County, and on the southeast by San Diego County.

The northwestern part of the county lies on the coastal plain of the Los Angeles Basin, while the southeastern end rises into the foothills of the Santa Ana Mountains. Most of Orange County's population reside in one of two shallow coastal valleys that lie in the basin, the Santa Ana Valley and the Saddleback Valley. The Santa Ana Mountains lie within the eastern boundaries of the county and of the Cleveland National Forest. The high point is Santiago Peak (5,687 ft/1,733 m), about 20 mi (32 km) east of Santa Ana. Santiago Peak and nearby Modjeska Peak, just 200 feet (60 m) shorter, form a ridge known as Saddleback, visible from almost everywhere in the county. The Peralta Hills extend westward from the Santa Ana Mountains through the communities of Anaheim Hills, Orange, and ending in Olive. The Loma Ridge is another prominent feature, running parallel to the Santa Ana Mountains through the central part of the county, separated from the taller mountains to the east by Santiago Canyon.

The Santa Ana River is the county's principal watercourse, flowing through the middle of the county from Northeast to Southwest. Its major tributary to the South and East is Santiago Creek. Other watercourses within the county include Aliso Creek, San Juan Creek, and Horsethief Creek. In the North, the San Gabriel River also briefly crosses into Orange County and exits into the Pacific on the Los Angeles-Orange County line between the cities of Long Beach and Seal Beach. Laguna Beach is home to the county's only natural lakes, Laguna Lakes, which are formed by water rising up against an underground fault. Residents sometimes figuratively divide the county into "North orange County" and "South County" (meaning Northwest and Southeast --following the county's natural diagonal orientation along the local coastline). This is more of a cultural and demographic distinction perpetuated by the popular television shows "The OC" and "Laguna Beach," between the older areas closer to Los Angeles, and the more affluent and recently developed areas to the South and East. A transition between older and newer development may be considered to exist roughly parallel to State Route 55 (aka the Costa Mesa Freeway). This transition is accentuated by large flanking tracts of sparsely developed area occupied until recent years by agriculture and military airfields.

While there is a natural topographical Northeast-to-Southwest transition from inland elevations to the lower coastal band, there is no formal geographical division between North and South County. Perpendicular to that gradient, the Santa Ana River roughly divides the county between northwestern and southeastern sectors (about 40% to 60% respectively, by area), but does not represent any apparent economic, political or cultural differences, nor does it significantly affect distribution of travel, housing, commerce, industry or agriculture from one side to the other.

Unlike many other large centers of population in the United States, Orange County uses its county name as its source of identification whereas other places in the country are identified by the large city that is closest to them. This is because there is no defined center to Orange County like there is in other areas which have one distinct large city. Five Orange County cities have populations exceeding 170,000 while no cities in the county have populations surpassing 360,000. Seven of these cities are among the 200 largest cities in the United States.

Orange County is also famous as a tourist destination, as the county is home to such attractions as Disneyland and Knott's Berry Farm, as well as sandy beaches for swimming and surfing, yacht harbors for sailing and pleasure boating, and extensive area devoted to parks and open space for golf, tennis, hiking, kayaking, cycling, skateboarding, and other outdoor recreation. It is at the center of Southern California's Tech Coast, with Irvine being the primary business hub.


Orange County was Created March 11 1889, from part of Los Angeles County, and, according to tradition, so named because of the flourishing orange culture. Orange, however, was and is a commonplace name in the United States, used originally in honor of the Prince of Orange, son-in-law of King George II of England.

Incorporated: March 11, 1889 Legislative Districts: * Congressional: 38th-40th, 42nd & 43 * California Senate: 31st-33rd, 35th & 37 * California Assembly: 58th, 64th, 67th, 69th, 72nd & 74 County Seat: Santa Ana County Information: Robert E. Thomas Hall of Administration 10 Civic Center Plaza, 3rd Floor, Santa Ana 92701 Telephone: (714)834-2345 Fax: (714)834-3098 County Government Website: http://www.oc.ca.gov