2017/10/9
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.
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