Insurance policies for taste buds, mustaches, and naughty kids(?) (9/5/14)
The markets initially reacted negatively to August’s disappointing jobs report but rebounded throughout the day, due to the fact that many believe the weaker-than-expected data could delay an interest rate hike by the Fed.
The Dow gained 67 points, with 21 of its 30 components advancing; the S&P 500 Index added 10, closing at a new high; and the Nasdaq rose 20. Advancers led decliners by three to two on the NYSE and by seven to six on the Nasdaq. The prices of Treasuries strengthened. Gold futures ticked up $0.80 to close at $1,267.30 an ounce, and the price of crude oil slid $1.16 to settle at $93.29 a barrel.
For the week, the Dow was up 0.78%, the S&P 500 Index increased 0.96%, and the Nasdaq advanced 0.98%.
In Other Business News:
- Nonfarm payrolls increased by 142,000 in August, according to the Labor Department, far less than the year-to-date monthly average of 215,000 and the expected figure of 220,000. The unemployment rate dropped to 6.1%. Some economists note that the August figures have historically come in below expectations and that they may be revised upward. For more information on how the Fed may react to the data, read Dr. Brian Jacobsen’s analysis.
- Dollar General’s sweetened offer of $9.1 billion was rejected by Family Dollar Stores on concerns that a merger of the country’s two largest dollar stores would trigger anti-trust concerns. Family Dollar intends to close its deal with Dollar Tree, which reiterated that it would be willing to close as many stores as needed, and Dollar General said it intends to continue its pursuit of Family Dollar. Shares of Family Dollar (FDO) closed down 1%, shares of Dollar General (DG) fell 2%, and shares of Dollar Tree (DLTR) gained 1%.
- Tesla announced on Thursday that it will build its new battery “Gigafactory” in Nevada. The state had offered $1.25 billion in tax incentives over 20 years to attract the company, and it expects an economic impact of $100 billion. The factory will cost $4 billion to $5 billion to build and will employ 6,500 workers. Separately, CEO Elon Musk admitted that the company’s share price is currently “kind of high”, which helped send the stock (TSLA) lower by 3%.
- Chinese e-commerce company Alibaba Group Holding, which is poised to launch the largest IPO in U.S. history later this month, announced that its shares will be priced between $60 and $66, resulting in a valuation of approximately $160 billion.
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For many of us, if we obtain something of value, one of our first instincts is to protect that object by getting insurance. Over the years, some people have pushed the envelope of what could be considered insurable. For those individuals, Lloyd’s of London is happily willing to accommodate those more unusual requests:
· In 1952, they insured a food critic’s taste buds for $400,000. I bet that would leave a bad taste in their mouth if Lloyd’s ever had to pay that one out.
· Merv Hughes was one of the biggest cricket players in the late 1980s/early 1990s. (I believe I’ll take their word for it.) Part of what made him so recognizable was his walrus mustache. It was so important to him that he had it insured for $370,000.
But insuring valuable possessions isn’t something that’s second nature in many areas of the world. Take, for example, China. China has 1 billion more people than the U.S., yet insurance premiums there total less than $278 billion, a fraction of the $1.3 trillion U.S. market.
Insurers are looking to take a page out of the Lloyd’s of London playbook and offer unique policies in order to lure people in. Consider these policies sold by Chinese insurance company Ancheng:
· Are you a famous food critic who burned your tongue eating hotpot (a Chinese tradition where meat and vegetables are cooked in a boiling pot of soup)? You’re covered! Ancheng sells a policy to compensate you for any medical bills resulting from your meal.
· Are you a famous cricket player who happened to overindulge while cheering on your home team during last summer’s World Cup? You’re covered! Ancheng sold policies to protect you from the effects of over-drinking.
· What about something for the normal Joe? Do you have kids? Are you shelling out more money to pay for another window they’ve broken? You’re covered! Ancheng also sells naughty kid insurance.
Most of my insurance needs are met (although that naughty kid policy is intriguing), but the odd policy I do need is one to cover the devastation wrought to my home by flying squirrels. Not by the squirrels themselves…they seem pretty harmless (not that I get close enough). It’s the devastation caused by the cat and the dog chasing the squirrel and the kids running away from the squirrel, as well as the mental anguish of waking up to this mess at 4 a.m. in the morning. Ugh. I think I need to give Ancheng a call.
