PREFACE

This tenth edition of Fundamentals of Risk and Insurance marks the 36th anniversary of the first edition, published in 1972. Over the years, the book has undergone major change as the field of risk management and insurance has changed. Emmett J. Vaughan, an author in the first and all subsequent editions, guided the revisions over the years to maintain the text’s primary focus—that of a consumeroriented text. He was passionate about the field of risk and insurance, and his passion was reflected in the book through the decades. Professor Vaughn found the influence of risks and insurance everywhere, from events of personal life to the changing world around him, fairy tale read to his children (with commentary). His enthusiasm for the field was infectious and influenced many students to pursue careers in risk and insurance. I was fortunate to have him as a teacher, advisor, role model, and father.

Professor Vaughan died in October 2004, just as we were beginning to discuss the tenth edition of the book. This text had been a proud accomplishment of his for over 30 years, and it is with some apprehension that I have completed this revision without his guidance. At its heart, of course, this is his book. While I have updated it to reflect recent developments and tried (mostly without success) to shorten it in parts, the bulk of the text reflects his thoughts over his forty-plus year career. I hope that I have been able to capture some of the enthusiasm with which he approached the field.

At the time the first edition was published, the field of insurance was quite different from what it is today. Many of the current forms of insurance coverage did not exist; the world seemed a simpler place. Medicare was not yet ten years old, and had no Parts C and D. Richard Nixon was president of the United States. Automobile no-fault was an experiment that had been adopted by a single state (Massachusetts), and only three states had compul

sory automobile insurance (New York, North Carolina, and Massachusetts). The 1943 Standard Fire Policy was the standard form of coverage for most commercial entities, and the Family Auto Policy was the standard for personal automobile insurance. Universal life insurance was not yet on the drawing board and endowment policies were a staple for the life insurance agent. There was no such thing as long-term care insurance, no individual retirement accounts, and ERISA was not yet a gleam in a Congressperson’s eye. The Social Security tax base was $9000 and the Medicare Part B premium was $5.60.

Although the book has changed over the years, its purpose, organization, and approach remain essentially the same. The original goal was to create a consumer-oriented text, and this orientation is continued in the present edition. The first edition of this book was written in response to a perceived need for an insurance textbook that addressed the principles of risk management without abandoning the discussion of insurance. The reception to the book over the past three and a half decades has been gratifying. At least a part of the book’s success is due to the fascinating subject matter with which it deals. Experience shows that insurance can be an exciting subject. This comes as no surprise to those of us who find this field an exciting one. It is satisfying, however, to find that our excitement can be shared by our students.