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on Insurance Economics |
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Issue of 2010‒03‒28
four papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Peter Haan; Victoria Prowse |
| Abstract: | In this paper we use a dynamic structural life-cycle model to analyze the employment, fiscal and welfare effects induced by unemployment insurance. The model features a detailed specification of the tax and transfer system, including unemployment insurance benefits which depend on an individual's employment and earnings history. The model also captures the endogenous accumulation of experience which impacts on future wages, job arrivals and job separations. For better identification of the structural parameters we exploit a quasi-natural experiment, namely reductions over time in the entitlement period for unemployment insurance benefits which varied by age and experience. The results show that a policy cut in the generosity of unemployment insurance operationalized as a reduction in the entitlement period generates a larger increase in employment and yields a bigger fiscal saving than a cut operationalized as a reduction in the replacement ratio. Welfare analysis of revenue neutral tax and transfer reforms also favors a reduction in the entitlement period. |
| Keywords: | Unemployment insurance, Replacement ratio, Entitlement period, Life-cycle labor supply, Tax reform, Method of Simulated Moments |
| JEL: | C23 C25 J22 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp986&r=ias |
| By: | Walker, George; Lin, Tun; Kobayashi, Yoshiaki |
| Abstract: | Flood insurance, a component of catastrophe insurance, is universally available in only a few countries. In many countries, it is available in a restricted form and its conditions vary greatly. Coverage is usually denied to those regarded as relatively high risk for flooding. This working paper analyzes the feasibility of providing flood insurance vis-à-vis the experience in the People's Republic of China (PRC). Specifically, it presents the findings of an ADB-funded pilot study on the feasibility of flood insurance in the Xinhua County Town. Based on a sample building survey of Xinhua, a technical analysis of flood insurance risk in terms of location, construction type, and occupancy at each floor level was conducted, and the study determined premium rates based on both indemnity insurance and parametric insurance approach. A survey of affordability, undertaken in conjunction with the building survey, enabled an assessment of the technical feasibility of flood insurance. Operational feasibility was investigated by examining several alternative systems, ranging from a fully reinsured self-supporting commercial approach to a system subsidized, managed, and guaranteed by the government. Although this study was based on a relatively small rural city in a relatively poor region, the results as far as the feasibility of normal indemnity flood insurance is concerned are little different from the experience with flood insurance in the developed world. In this time when the PRC is experiencing rapid urbanization and a surge in building construction, a particularly relevant policy direction arising from the study is for the government to provide a policy package and an enabling environment to ensure the implementability and sustainability of flood insurance, including flood maps and building codes. |
| Keywords: | flood insurance; catastrophe insurance; China; Xinhua pilot study; flood risk |
| JEL: | G2 Q5 G22 Q54 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21254&r=ias |
| By: | Wang, Zifa; Lin, Tun; Walker, George |
| Abstract: | The year 2008 witnessed the renewed interests in earthquake risk management and insurance in the People's Republic of China (PRC), after the Wenchuan earthquake hit the country in May. Located along the southeastern edge of the Euro-Asian Plate, the PRC has a relatively high seismicity, which is manifested by the frequent occurrence of large and disastrous earthquakes. Buildings and infrastructure in the earthquake-prone regions of the PRC have relatively low earthquake resistance levels. Hence, disastrous earthquakes result not only in large numbers of injuries and fatalities but also in huge economic losses from property damages. While the PRC began testing earthquake insurance programs in the late 1980s, the overall penetration rate remains very low. The low penetration rate not only creates disruptions for the government after a major earthquake but also, in some cases, delays the reconstruction efforts. Moreover, as a result of the low penetration of earthquake insurance in the PRC, the government serves as the predominant bearer of financial risk from earthquake catastrophes. This paper discusses historical earthquakes and earthquake risk in the PRC and the recent developments of PRC's earthquake risk reduction efforts. The general principles of earthquake programs are explained and the critical issues of formulating earthquake programs in the PRC are discussed, including lessons from earthquake insurance in other countries and other catastrophe insurance in the PRC, data issues, loss risk modeling issues, financial risk modeling issues, legislative issues, and public awareness issues. The paper concludes with several policy directions that the Asian Development Bank can take to help the PRC in its design and implementation of earthquake insurance. |
| Keywords: | earthquake insurance; China; earthquake risk; Wenchuan earthquake; catastrophe insurance |
| JEL: | G2 Q5 G22 Q54 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21248&r=ias |
| By: | Kumagai, Narimasa |
| Abstract: | In Japan, economic stagnation due to the lack of aggregate demand has hit the regional health insurance system and this affects most retired pensioners. The fiscal state of insurers in rural areas deteriorated. This paper aims to investigate whether the regional disparities in medical levies per household make a contribution to income-related geographic inequalities in health care financing. Data of the central two regions of the Japanese National Health Insurance in 2005 were extracted. Their share of population was about 41.5 percent. Retired employees and self-employed individuals are covered by this insurance system. We conducted the geographic decomposition using the concentration index. The within-area inequality in medical levies mainly accounted for geographic inequality in medical levies per household. The hypothesis that there was no between-area inequality in medical levies was not rejected. We revealed the differences in the within-area inequality in medical levies in the central Kanto. This means such proportionality was not built into the NHI system through near constant contribution rates across the distribution of living standards. It can be considered that the differences in the within-area inequality were caused by the inequality in income per household and the multiplier of income levies. We found that income per household, the standard land price of residential districts and the size of an insurer are major determinants of the multiplier of income levies. The higher land price tends to greater the multiplier of income levies. The expansion of insurer's size increases the multiplier of income levies in most of districts. The inequality in the multiplier of income levies will reduce if local governments raise per-household levy in proportion to the size of an insurer and lower the multiplier of income levy. |
| Keywords: | Decomposition, Inequality, Japan, Medical Levies, National Health Insurance |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:piecis:465&r=ias |