## Archive for October, 2017

### usps insurance rates

What do USPS insurance rates tell us about its operations? Here is a 2007 document regarding insurance rates for domestic mail:

Prices for insurance coverage changed as follows:
Value up to $50 is$1.65.
$50.01 to$100 is $2.05.$100.01 to $200 is$2.45.
$200.01 to$300 is $4.60. The price per additional$100 of insurance, valued over $300 up to$5,000, is $4.60 plus$0.90 per each $100 or fraction thereof. Crudely taking the mid-point of each bracket up to$300, we get implied loss rates of 6.6%, 2.73%, 1.63%, 1.84%, respectively. The rate converges asymptotically to $0.90/$100, or 0.9% implied loss. The numbers have such a wide range that it’s worth taking a closer look.