Table used by the Centers for Medicare and Medicaid Services (CMS) to compute and update the indexes for most facilities. It takes into consideration three elements: a set of input categories (labor, supplies, purchased services); a set of price proxies that represent price levels for the input categories; and a fixed set of weights (proportions) that represent the importance of each input category in providers’ input expenditures for the base year. The formula is to take the actual or projected values of the price proxies for a year, multiply them by the category weights, and total them to get the overall market basket index value for the year. For physicians’ office practices, see Medicare Economic Index (MEI) .
Insurance Encyclopedia
Market capacity
See: Capacity.
***
The amount of insurance that an be absorbed by all the insurers in the relevant market.
Market captive
The parent of a captive insurance company.
Market conduct
A measure of how insurers and their agents are complying with the laws that govern the insurance business, specifically the sales and marketing, and issuance of products.
Market conduct examination
An examination conducted by the state’s insurance department to evaluate the practices and operations of an insurer. This examination aims to establish the insurer’s authority to conduct business in that state.
Market Cost / Market Value
Current price at which an item of real or personal property can be exchanged between a willing buyer and a willing seller. In case of real estate the market value depends on demand and supply and is established by obtaining offers for purchase. Personal property which is readily available in market can be valued by its purchase price or invoice price from the market.
Market cycles
Market-wide fluctuations in the prevailing level of insurance and reinsurance premiums. A soft market (i.e., a period of increased competition, depressed premiums, and excess capacity) is followed by a hard market—a period of rising premiums and decreased capacity. Traditionally, each period has a causative effect on the other. For example, in a hard market, insurers’ earnings are greater than during a soft market. Large earnings have the effect of increasing capacity. More capacity means more supply. When supply equals or exceeds demand, premiums go down, competition heats up, and earnings begin to shrink. Once earnings shrink to the point where the amount of capacity is reduced, the market hardens up, and the cycle starts all over again.
Market level adjustment
Adjustment applied to actuarial liability to reflect the difference between the market value and the actuarial value of the assets.
Market overt
The rule, that a person who bought goods in ‘market overt’ (an open market) acquired a good title even if the goods were stolen, has been abolished by the Sale of Goods (Amendment) Act 1994. The so-called ‘thieves charter’ prejudiced the real owners of the goods and frustrated the subrogation rights of theft insurers.
Market Pools for Liability Insurance
Market pools formed by a consortium of insurers are not very common in liability insurance except perhaps in extra-hazardous risks e.g., demolition contracts. However, public liability insurance for nuclear reactor operations is available on a pooling basis, from the “British Insurance (Atomic Energy) Committee comprising the insurance companies and Lloyd’s underwriters.