Tuesday, July 8, 2008

Vehicle insurance

Vehicle insurance


Vehicle insurance/auto insurance
It(also known car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

Auto insurance risk selection
Auto insurance risk selection is the process by which vehicle insurers determine whether or not to insure an individual and what insurance premium to charge. Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company in accordance to a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages.

When the premium is not mandated by the government, it is usually derived from the calculations of an actuary based on statistical data. The premium can vary depending on many factors that are believed to have an impact on the expected cost of future claims. Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven).

History
Conventional methods for determining costs of motor vehicle insurance involve gathering relevant historical data from a personal interview with, or a written application completed by, the applicant for the insurance and by referencing the applicant's public motor vehicle driving record that is maintained by a governmental agency, such as a Bureau of Motor Vehicles. Such data results in a classification of the applicant to a broad actuarial class for which insurance rates are assigned based upon the empirical experience of the insurer. Many factors are deemed relevant to such classification in a particular actuarial class or risk level, such as age, sex, marital status, location of residence and driving record.

The current system of insurance creates groupings of vehicles and drivers (actuarial classes) based on the following types of classifications.

* Vehicle: Age; manufacturer, model; and value.
* Driver: Age; sex; marital status; driving record (based on government reports), violations (citations); at fault accidents; and place of residence.
* Coverage: Types of losses covered, liability, uninsured or underinsured motorist, comprehensive, and collision; liability limits; and deductibles.

The classifications, such as age, are further broken into actuarial classes, such as 21 to 24 year olds, to develop a unique vehicle insurance cost based on the specific combination of attributes for a particular risk. For example, the following information would produce a unique vehicle insurance cost:

* Vehicle: Age - 7 years old; manufacturer, model - Ford, Explorer XLT; value $ 18,000
* Driver: Age - 38 years old; gender - male; marital status - single; driving record (based on government reports) violations - 1 point (speeding); at fault accidents - 3 points (one at fault accident); place of residence 33619 (zip code)
* Coverage: Types of losses covered; liability - yes; uninsured or underinsured - no; motorist comprehensive - yes; collision - yes; liability limits - $100,000/$300,000/$50,000; deductibles - $500/$500.

A change to any of this information might result in a different premium being charged if the change resulted in a different actuarial class or risk level for that variable. For instance, a change in the drivers' age from 38 to 39 may not result in a different actuarial class because 38 and 39 year old people may be in the same actuarial class. However, a change in driver age from 38 to 45 may result in a different premium because the records of the insurer indicate a difference in risk associated with those ages and, therefore, the age difference results in a change in actuarial class or assigned risk level.

Current insurance rating systems also provide discounts and surcharges for some types of use of the vehicle, equipment on the vehicle and type of driver. Common surcharges and discounts include:

* Discounts: Safety equipment on the vehicle airbags, and antilock brakes; theft control devices passive systems (e.g. The Club), and alarm system; and driver type - good student, and safe driver (accident free); group - senior drivers fleet drivers .

Telematic systems
Telematics Insurance System from AIOI patent application WO patent 2005083605

Conventional rating systems are primarily based on past realized losses and the past record of other drivers with similar characteristics. More recently, telematic systems have been introduced whereby the actual driving performance of a given driver is monitored and communicated directly to the insurance company. The insurance company then assigns the driver to a risk class based on the monitored driving behavior. An individual, therefore, can be put into different risk classes from month to month depending upon how they drive. For example, a driver who drives long distance at high speed in one month might be placed into a high risk class for that month and pay a large premium. If the same driver drives for short distances at low speed the next month, however, then he or she might be placed into a lower risk class and charged a lower premium.

Norwich Union is currently offering a type of telematic auto insurance in the United Kingdom called Pay as You Drive. This system employs a combination global positioning system (GPS) and cell phone in a car to monitor driving performance and communicate risk factors to the insurance company. Drivers are offered a discount if they exhibit safe driving. Trials conducted by Norwich Union in 2005 have found that young drivers (18 to 23 year olds) signing up for telematic auto insurance have had a 20% lower accident rate than average.

In the United States, Progressive Corporation is offering a form of telematic auto insurance to residents of Minnesota called TripSenseTM. The TripSense system consists of a black box that the driver plugs into their car's OBD-II port. The black box monitors the mileage driven, speed, time of day and other parameters, but not the car's location. The user then checks the black box once a month on their home computer. The home computer tells them if they qualify for a discount. If they do, they can download the information to the insurance company and get the discount. If they don't they do not have to download the information.

Other insurance companies are offering telematic auto insurance products in Germany, South Africa, and Japan.

Patented risk selection systems

New risk selection methods may be patentable to a greater or lesser degree depending upon the patent laws of various countries. These patents are generally described as business method patents. The United States is fairly liberal in granting business method patents. Europe is fairly conservative.

Different forms of telematic auto insurance, for example, were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance us patent 5797134 and a Spanish independent inventor, Salvador Minguijon Perez EU patent 700009. The Progressive patents cover the use of a cell phone and GPS to track movements of a car. The Perez patent covers monitoring the car's engine control computer to determine distance driven, speed, time of day, braking force, etc. Ironically, Progressive is developing the Perez technology in the US and Norwich Union is developing the Progressive technology for Europe under a license from Progressive. Progressive does not have to get a license to the Perez patent since it was never filed in the US.

Friday, July 4, 2008

INSURANCE

Insurance
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. 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.
Contents 1 Principles of insurance 2 Indemnification 3 Insurer’s business model

Principles of insuranceFinancial marketparticipants InvestorsHedge fundsPrivate equityVenture capital
Speculation
Institutional investorsBanksBuilding societiesTrustsCollective investment schemesCredit UnionsInsurance companiesInvestment banksPension fundsPrime BrokersTrusts
seriesFinancial marketParticipantsCorporate financePersonal financePublic financeBanks and BankingFinancial regulation
Commercially insurable risks typically share seven common characteristics.
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. 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 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. 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. 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. 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) 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. 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 insurers 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.
[edit] IndemnificationMain article: IndemnityThe 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; i.e. 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.
[edit] Insurer’s business modelProfit = 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 insureds.
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 US, 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

Monday, June 30, 2008

GLOBAL WARMING

Global warming
It is the increase in the average measured temperature of the Earth's near-surface air and oceans since the mid-twentieth century, and its projected continuation.

The average global air temperature near the Earth's surface increased 0.74 ± 0.18 °C (1.33 ± 0.32 °F) during the hundred years ending in 2005.The Intergovernmental Panel on Climate Change (IPCC) concludes "most of the observed increase in globally averaged temperatures since the mid-twentieth century is very likely due to the observed increase in anthropogenic (man-made) greenhouse gas concentrations" via an enhanced greenhouse effect. Natural phenomena such as solar variation combined with volcanoes probably had a small warming effect from pre-industrial times to 1950 and a small cooling effect from 1950 onward.

These basic conclusions have been endorsed by at least thirty scientific societies and academies of science,including all of the national academies of science of the major industrialized countries.While individual scientists have voiced disagreement with some findings of the IPCC, The Royal Society asserts that the overwhelming majority of scientists working on climate change agree with the IPCC's main conclusions.[

Climate model projections summarized by the IPCC indicate that average global surface temperature will likely rise a further 1.1 to 6.4 °C (2.0 to 11.5 °F) during the twenty-first century. This range of values results from the use of differing scenarios of future greenhouse gas emissions as well as models with differing climate sensitivity. Although most studies focus on the period up to 2100, warming and sea level rise are expected to continue for more than a thousand years even if greenhouse gas levels are stabilized. The delay in reaching equilibrium is a result of the large heat capacity of the oceans.

Increasing mean global temperature is expected to cause sea level to rise, an increase in the intensity of extreme weather events, and significant changes to the amount and pattern of precipitation. Other expected effects of global warming include changes in agricultural yields, modifications of trade routes, glacier retreat, species extinctions and increases in the ranges of disease vectors.

Remaining scientific uncertainties include the amount of warming expected in the future, and how warming and related changes will vary from region to region around the globe. Most national governments have signed and ratified the Kyoto Protocol aimed at reducing greenhouse gas emissions, but there is ongoing political and public debate worldwide regarding what, if any, action should be taken to reduce or reverse future warming or to adapt to its expected consequences.


Terminology

The term "global warming" refers to the warming in recent decades and its projected continuation, and implies a human influence. The United Nations Framework Convention on Climate Change (UNFCCC) uses the term "climate change" for human-caused change, and "climate variability" for other changes.. The term "climate change" recognizes that rising temperatures are not the only effect. The term "anthropogenic global warming" (AGW) is sometimes used when focusing on human-induced changes.
Components of the current radiative forcing as estimated by the IPCC Fourth Assessment Report.
Components of the current radiative forcing as estimated by the IPCC Fourth Assessment Report.

Attribution of recent climate change and Scientific opinion on climate change
The Earth's climate changes in response to external forcing, including variations in its orbit around the Sun (orbital forcing),, changes in solar luminosity, volcanic eruptions, and atmospheric greenhouse gas concentrations. The detailed causes of the recent warming remain an active field of research, but the scientific consensus is that the increase in atmospheric greenhouse gases due to human activity caused most of the warming observed since the start of the industrial era. This attribution is clearest for the most recent 50 years, for which the most detailed data are available. Some other hypotheses departing from the consensus view have been suggested to explain most of the temperature increase. One such hypothesis proposes that warming may be the result of variations in solar activity.

None of the effects of forcing are instantaneous. The thermal inertia of the Earth's oceans and slow responses of other indirect effects mean that the Earth's current climate is not in equilibrium with the forcing imposed. Climate commitment studies indicate that even if greenhouse gases were stabilized at 2000 levels, a further warming of about 0.5 °C (0.9 °F) would still occur.

Greenhouse gas and Greenhouse effect

The greenhouse effect was discovered by Joseph Fourier in 1824 and was first investigated quantitatively by Svante Arrhenius in 1896. It is the process by which absorption and emission of infrared radiation by atmospheric gases warm a planet's lower atmosphere and surface.
Recent increases in atmospheric carbon dioxide (CO2). The monthly CO2 measurements display small seasonal oscillations in an overall yearly uptrend; each year's maximum is reached during the Northern Hemisphere's late spring, and declines during the Northern Hemisphere growing season as plants remove some CO2 from the atmosphere.
Recent increases in atmospheric carbon dioxide (CO2). The monthly CO2 measurements display small seasonal oscillations in an overall yearly uptrend; each year's maximum is reached during the Northern Hemisphere's late spring, and declines during the Northern Hemisphere growing season as plants remove some CO2 from the atmosphere.

Existence of the greenhouse effect as such is not disputed. Naturally occurring greenhouse gases have a mean warming effect of about 33 °C (59 °F), without which Earth would be uninhabitable. On Earth, the major greenhouse gases are water vapor, which causes about 36–70% of the greenhouse effect (not including clouds); carbon dioxide (CO2), which causes 9–26%; methane (CH4), which causes 4–9%; and ozone, which causes 3–7%. The issue is how the strength of the greenhouse effect changes when human activity increases the atmospheric concentrations of some greenhouse gases.

Human activity since the industrial revolution has increased the concentration of various greenhouse gases, leading to increased radiative forcing from CO2, methane, tropospheric ozone, CFCs and nitrous oxide. Molecule for molecule, methane is a more effective greenhouse gas than carbon dioxide, but its concentration is much smaller so that its total radiative forcing is only about a fourth of that from carbon dioxide. Some other naturally occurring gases contribute small fractions of the greenhouse effect; one of these, nitrous oxide (N2O), is increasing in concentration owing to human activity such as agriculture. The atmospheric concentrations of CO2 and CH4 have increased by 31% and 149% respectively since the beginning of the industrial revolution in the mid-1700s. These levels are considerably higher than at any time during the last 650,000 years, the period for which reliable data has been extracted from ice cores. From less direct geological evidence it is believed that CO2 values this high were last attained 20 million years ago. Fossil fuel burning has produced approximately three-quarters of the increase in CO2 from human activity over the past 20 years. Most of the rest is due to land-use change, in particular deforestation.
Yearly increase of atmospheric CO2: In the 1960s, the average annual increase was 37% of what it was in 2000 through 2007.
Yearly increase of atmospheric CO2: In the 1960s, the average annual increase was 37% of what it was in 2000 through 2007.

The present atmospheric concentration of CO2 is about 385 parts per million (ppm) by volume. Future CO2 levels are expected to rise due to ongoing burning of fossil fuels and land-use change. The rate of rise will depend on uncertain economic, sociological, technological, and natural developments, but may be ultimately limited by the availability of fossil fuels. The IPCC Special Report on Emissions Scenarios gives a wide range of future CO2 scenarios, ranging from 541 to 970 ppm by the year 2100. Fossil fuel reserves are sufficient to reach this level and continue emissions past 2100, if coal, tar sands or methane clathrates are extensively used.


Effects of global warming
The effects of forcing agents on the climate are complicated by various feedback processes.

One of the most pronounced feedback effects relates to the evaporation of water. Warming by the addition of long-lived greenhouse gases such as CO2 will cause more water to evaporate into the atmosphere. Since water vapor itself acts as a greenhouse gas, the atmosphere warms further; this warming causes more water vapor to evaporate (a positive feedback), and so on until other processes stop the feedback loop. The result is a much larger greenhouse effect than that due to CO2 alone. Although this feedback process causes an increase in the absolute moisture content of the air, the relative humidity stays nearly constant or even decreases slightly because the air is warmer. This feedback effect can only be reversed slowly as CO2 has a long average atmospheric lifetime.

Feedback effects due to clouds are an area of ongoing research. Seen from below, clouds emit infrared radiation back to the surface, and so exert a warming effect; seen from above, clouds reflect sunlight and emit infrared radiation to space, and so exert a cooling effect. Whether the net effect is warming or cooling depends on details such as the type and altitude of the cloud. These details are difficult to represent in climate models, in part because clouds are much smaller than the spacing between points on the computational grids of climate models.

A subtler feedback process relates to changes in the lapse rate as the atmosphere warms. The atmosphere's temperature decreases with height in the troposphere. Since emission of infrared radiation varies with the fourth power of temperature, longwave radiation emitted from the upper atmosphere is less than that emitted from the lower atmosphere. Most of the radiation emitted from the upper atmosphere escapes to space, while most of the radiation emitted from the lower atmosphere is re-absorbed by the surface or the atmosphere. Thus, the strength of the greenhouse effect depends on the atmosphere's rate of temperature decrease with height: if the rate of temperature decrease is greater the greenhouse effect will be stronger, and if the rate of temperature decrease is smaller then the greenhouse effect will be weaker. Both theory and climate models indicate that warming will reduce the decrease of temperature with height, producing a negative lapse rate feedback that weakens the greenhouse effect. Measurements of the rate of temperature change with height are very sensitive to small errors in observations, making it difficult to establish whether the models agree with observations.
Northern Hemisphere ice trends


Southern Hemisphere ice trends
Another important feedback process is ice-albedo feedback. When global temperatures increase, ice near the poles melts at an increasing rate. As the ice melts, land or open water takes its place. Both land and open water are on average less reflective than ice, and thus absorb more solar radiation. This causes more warming, which in turn causes more melting, and this cycle continues.

Positive feedback due to release of CO2 and CH4 from thawing permafrost, such as the frozen peat bogs in Siberia, is an additional mechanism that could contribute to warming.Similarly a massive release of CH4 from methane clathrates in the ocean could cause rapid warming, according to the clathrate gun hypothesis.

The ocean's ability to sequester carbon is expected to decline as it warms. This is because the resulting low nutrient levels of the mesopelagic zone (about 200 to 1000 m depth) limits the growth of diatoms in favor of smaller phytoplankton that are poorer biological pumps of carbon.

Solar variationover the last thirty years.

Solar variation

A few papers suggest that the Sun's contribution may have been underestimated. Two researchers at Duke University, Bruce West and Nicola Scafetta, have estimated that the Sun may have contributed about 45–50% of the increase in the average global surface temperature over the period 1900–2000, and about 25–35% between 1980 and 2000. A paper by Peter Stott and other researchers suggests that climate models overestimate the relative effect of greenhouse gases compared to solar forcing; they also suggest that the cooling effects of volcanic dust and sulfate aerosols have been underestimated. They nevertheless conclude that even with an enhanced climate sensitivity to solar forcing, most of the warming since the mid-20th century is likely attributable to the increases in greenhouse gases.

A different hypothesis is that variations in solar output, possibly amplified by cloud seeding via galactic cosmic rays, may have contributed to recent warming. It suggests magnetic activity of the sun is a crucial factor which deflects cosmic rays that may influence the generation of cloud condensation nuclei and thereby affect the climate.

One predicted effect of an increase in solar activity would be a warming of most of the stratosphere, whereas greenhouse gas theory predicts cooling there. The observed trend since at least 1960 has been a cooling of the lower stratosphere. Reduction of stratospheric ozone also has a cooling influence, but substantial ozone depletion did not occur until the late 1970s. Solar variation combined with changes in volcanic activity probably did have a warming effect from pre-industrial times to 1950, but a cooling effect since. In 2006, Peter Foukal and other researchers from the United States, Germany, and Switzerland found no net increase of solar brightness over the last thousand years. Solar cycles led to a small increase of 0.07% in brightness over the last thirty years. This effect is too small to contribute significantly to global warming. One paper by Mike Lockwood and Claus Fröhlich found no relation between global warming and solar radiation since 1985, whether through variations in solar output or variations in cosmic rays. Henrik Svensmark and Eigil Friis-Christensen, the main proponents of cloud seeding by galactic cosmic rays, disputed this criticism of their hypothesis. A 2007 paper found that in the last 20 years there has been no significant link between changes in cosmic rays coming to Earth and cloudiness and temperature.



Temperature changes
Two millennia of mean surface temperatures according to different reconstructions, each smoothed on a decadal scale. The unsmoothed, annual value for 2004 is also plotted for reference.
Two millennia of mean surface temperatures according to different reconstructions, each smoothed on a decadal scale. The unsmoothed, annual value for 2004 is also plotted for reference.
Temperature record
RecentGlobal temperatures on both land and sea have increased by 0.75 °C (1.35 °F) relative to the period 1860–1900, according to the instrumental temperature record. This measured temperature increase is not significantly affected by the urban heat island effect. Since 1979, land temperatures have increased about twice as fast as ocean temperatures (0.25 °C per decade against 0.13 °C per decade). Temperatures in the lower troposphere have increased between 0.12 and 0.22 °C (0.22 and 0.4 °F) per decade since 1979, according to satellite temperature measurements. Temperature is believed to have been relatively stable over the one or two thousand years before 1850, with possibly regional fluctuations such as the Medieval Warm Period or the Little Ice Age.

Sea temperatures increase more slowly than those on land both because of the larger effective heat capacity of the oceans and because the ocean can lose heat by evaporation more readily than the land.The Northern Hemisphere has more land than the Southern Hemisphere, so it warms faster. The Northern Hemisphere also has extensive areas of seasonal snow and sea-ice cover subject to the ice-albedo feedback. More greenhouse gases are emitted in the Northern than Southern Hemisphere, but this does not contribute to the difference in warming because the major greenhouse gases persist long enough to mix between hemispheres.

Based on estimates by NASA's Goddard Institute for Space Studies, 2005 was the warmest year since reliable, widespread instrumental measurements became available in the late 1800s, exceeding the previous record set in 1998 by a few hundredths of a degree. Estimates prepared by the World Meteorological Organization and the Climatic Research Unit concluded that 2005 was the second warmest year, behind 1998.Temperatures in 1998 were unusually warm because the strongest El Niño-Southern Oscillation in the past century occurred during that year.

Anthropogenic emissions of other pollutants—notably sulfate aerosols—can exert a cooling effect by increasing the reflection of incoming sunlight. This partially accounts for the cooling seen in the temperature record in the middle of the twentieth century, though the cooling may also be due in part to natural variability. James Hansen and colleagues have proposed that the effects of the products of fossil fuel combustion—CO2 and aerosols—have largely offset one another, so that warming in recent decades has been driven mainly by non-CO2 greenhouse gases.

Paleoclimatologist William Ruddiman has argued that human influence on the global climate began around 8,000 years ago with the start of forest clearing to provide land for agriculture and 5,000 years ago with the start of Asian rice irrigation.[64] Ruddiman's interpretation of the historical record, with respect to the methane data, has been disputed.

Pre-human climate variations
Curves of reconstructed temperature at two locations in Antarctica and a global record of variations in glacial ice volume. Today's date is on the left side of the graph.
Curves of reconstructed temperature at two locations in Antarctica and a global record of variations in glacial ice volume. Today's date is on the left side of the graph.

Paleoclimatology
Earth has experienced warming and cooling many times in the past. The recent Antarctic EPICA ice core spans 800,000 years, including eight glacial cycles timed by orbital variations with interglacial warm periods comparable to present temperatures.

A rapid buildup of greenhouse gases amplified warming in the early Jurassic period (about 180 million years ago), with average temperatures rising by 5 °C (9 °F). Research by the Open University indicates that the warming caused the rate of rock weathering to increase by 400%. As such weathering locks away carbon in calcite and dolomite, CO2 levels dropped back to normal over roughly the next 150,000 years.

Sudden releases of methane from clathrate compounds (the clathrate gun hypothesis) have been hypothesized as both a cause for and an effect of other warming events in the distant past, including the Permian–Triassic extinction event (about 251 million years ago) and the Paleocene–Eocene Thermal Maximum (about 55 million years ago).

Climate models

Calculations of global warming prepared in or before 2001 from a range of climate models under the SRES A2 emissions scenario, which assumes no action is taken to reduce emissions.
Calculations of global warming prepared in or before 2001 from a range of climate models under the SRES A2 emissions scenario, which assumes no action is taken to reduce emissions.
The geographic distribution of surface warming during the 21st century calculated by the HadCM3 climate model if a business as usual scenario is assumed for economic growth and greenhouse gas emissions. In this figure, the globally averaged warming corresponds to 3.0 °C (5.4 °F).
The geographic distribution of surface warming during the 21st century calculated by the HadCM3 climate model if a business as usual scenario is assumed for economic growth and greenhouse gas emissions. In this figure, the globally averaged warming corresponds to 3.0 °C (5.4 °F).

Global climate model
Scientists have studied global warming with computer models of the climate. These models are based on physical principles of fluid dynamics, radiative transfer, and other processes, with simplifications being necessary because of limitations in computer power and the complexity of the climate system. All modern climate models include an atmospheric model that is coupled to an ocean model and models for ice cover on land and sea. Some models also include treatments of chemical and biological processes.These models predict that the effect of adding greenhouse gases is to produce a warmer climate.However, even when the same assumptions of future greenhouse gas levels are used, there still remains a considerable range of climate sensitivity.

Including uncertainties in future greenhouse gas concentrations and climate modeling, the IPCC anticipates a warming of 1.1 °C to 6.4 °C (2.0 °F to 11.5 °F) by the end of the 21st century, relative to 1980–1999. Models have also been used to help investigate the causes of recent climate change by comparing the observed changes to those that the models project from various natural and human-derived causes.

Current climate models produce a good match to observations of global temperature changes over the last century, but do not simulate all aspects of climate.These models do not unambiguously attribute the warming that occurred from approximately 1910 to 1945 to either natural variation or human effects; however, they suggest that the warming since 1975 is dominated by man-made greenhouse gas emissions.

Global climate model projections of future climate are forced by imposed greenhouse gas emission scenarios, most often from the IPCC Special Report on Emissions Scenarios (SRES). Less commonly, models may also include a simulation of the carbon cycle; this generally shows a positive feedback, though this response is uncertain (under the A2 SRES scenario, responses vary between an extra 20 and 200 ppm of CO2). Some observational studies also show a positive feedback.
The representation of clouds is one of the main sources of uncertainty in present-generation models, though progress is being made on this problem.
A recent study by David Douglass, John Christy, Benjamin Pearson and Fred Singer comparing the composite output of 22 leading global climate models with actual climate data finds that the models do not accurately predict observed changes to the temperature profile in the tropical troposphere. The authors note that their conclusions contrast strongly with those of recent publications based on essentially the same data.

Tuesday, June 24, 2008

LOAN

Loan
A loan is a type of debt. All material things can be lent; this article, however, focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.


A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.

Unsecured

Unsecured loans are monetary loans that are not secured against the borrowers assets. These may be available from financial institutions under many different guises or marketing packages:

* credit card debt
* personal loans
* bank overdrafts
* credit facilities or lines of credit
* corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorised, it could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates and making money out of frivolous "extra charges".

Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.Loan
A loan is a type of debt. All material things can be lent; this article, however, focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.
Contents

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.[citation needed]

Unsecured

Unsecured loans are monetary loans that are not secured against the borrowers assets. These may be available from financial institutions under many different guises or marketing packages:

* credit card debt
* personal loans
* bank overdrafts
* credit facilities or lines of credit
* corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorised, it could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates and making money out of frivolous "extra charges". [1]

Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.

auto insurance quotes

Vehicle insurance
Insurance''', or '''motor insurance''') is [[insurance]] purchased for [[automobilecars]], [[truck]]s, and other vehicles. Its primary use is to provid ... ... ing or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.
Expatriate insurance
'''[[Expatriate]] [[Insurance]]''' policies are designed to cover financial and other losses incurred wh ... ... purchased on a 6 month to annual basis. It is important to purchase this insurance from a reputable company.

Saturday, June 21, 2008

global banking industry
Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion. This follows a 19.3% increase in the previous year. EU banks held the largest share, 50% at the end of 2005, up from 38% a decade earlier. The growth in Europe’s share was mostly at the expense of Japanese banks whose share more than halved during this period from 33% to 13%. The share of US banks also rose, from 10% to 14%. Most of the remainder was from other Asian and European countries. .

The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geography and regulatory structure, resulting in a large number of small to medium sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than 30,000 branches each—more than double the 15,000 branches in the UK.[7]
[edit] Bank crisisBanks are susceptible to many forms of risk which have triggered occasional systemic crises. Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those who owe money to the bank will not repay), and interest rate risk (the risk that the bank will become unprofitable if rising interest rates force it to pay relatively more on its deposits than it receives on its loans), among others.
Banking crises
have developed many times throughout history when one or more risks materialize for a banking sector as a whole. Prominent examples include the U.S. Savings and Loan crisis in 1980s and early 1990s [8] the Japanese banking crisis during the 1990s, the bank run that occurred during the Great Depression, and the recent liquidation by the central Bank of Nigeria, where about 25 banks were liquidated.