Sunday, July 29, 2007

Severance Insurance

If there is money to be saved, because the formula used to calculate severance benefit duration generates a benefit duration that significantly exceeds average/median unemployment durations, who gets to save it? The corporation? No question here unless there really is insurance, in which case it's these savings that incent the insurance company to write the coverage in the first place.

So, it's possible that the insurance companies see a natural arbitrage here and are willing to bite off a piece of it in the form of duration risk?

How big do you think that arbitrage is...days? weeks?


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