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on Insurance Economics |
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Issue of 2012‒09‒22
five papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Amy Khuu (Business School, University of Western Australia); Ernst Juerg Weber (Business School, University of Western Australia) |
| Abstract: | Farm survey data show that the risk aversion of West Australian farmers is comparable to that of other asset holders. An increase in the variability of crop yield by 20%, which may be caused by future climate change, would raise their willingness to pay for crop insurance almost one-to-one by 19%. West Australian farmers can insure against hail, fire and some other perils but not against the greatest risk – drought. The farm survey indicates that adverse selection does not arise in the existing market for crop insurance because insurance premiums reflect the risk of crop failure. However, a future supplier of drought insurance must take into consideration that drought insurance might give rise to moral hazard, changing the risk management practices of farmers. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:12-07&r=ias |
| By: | Rickne, Johanna (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Fifteen years after the introduction of highly ambitious social insurance programs for urban Chinese workers, a large number of them remain un-insured. This paper examines the relationship between labor market conditions and social insurance participation among industrial firms in the pre-crisis years of 2000–2007. I find that increased labor tightness over this period was a quantitatively important driver of participation. Comparing different segments of the labor market, stronger response to tightness is found in sectors with the largest shares of un-insured: private firms, those with a larger share of low-educated workers, and those without labor unions. Increased tightness in the years ahead can therefore be expected to aid policy makers in social insurance implementation and in combating insurance inequality. |
| Keywords: | Social insurance; Employer participation; Labor market tightness; People’s Republic of China |
| JEL: | D21 J64 J65 |
| Date: | 2012–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0924&r=ias |
| By: | Cavatorta, Elisa (SOAS, University of London); Pieroni, Luca (University of Perugia) |
| Abstract: | This paper explores behavioural changes resulting from the presence of a back-ground risk. Due to markets incompleteness, not all risks are insurable. The literature suggests that, according to the structure of preferences, agents bearing a background uninsurable risk are less willing to bear other insurable risks and increase their demand for insurance. The empirical evidence of this effect is limited and, despite the relevance of this question, unexplored in developing countries. This paper fills this gap. It explores the effect of a background risk on the decision to buy health insurance using household data from the Palestinian Territories. We consider the risk of food insecurity as a background uninsurable risk. Using a bivariate probit model, we find that the propensity to buy health insurance is positively affected by the presence of a background risk of food insecurity. When allowing the back-ground risk to vary in intensity, we find that the propensity to insure is higher as the background risk becomes more intense. These results are robust to alternative indicators of background risk. The study shows that, in presence of background risks, there might be incentive changes towards the desirability of insurance that have implications for policy design. |
| Keywords: | Background Risk; Food Insecurity; Health Insurance; Bivariate Probit |
| Date: | 2012–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nepswp:2012_006&r=ias |
| By: | Pashchenko, Svetlana; Porapakkarm, Ponpoje |
| Abstract: | Two key components of the upcoming health reform in the U.S. are a new regulation of the individual health insurance market and an increase in income redistribution in the economy. Which component contributes more to the welfare outcome of the reform? We address this question by constructing a general equilibrium life cycle model that incorporates both medical expenses and labor income risks. We replicate the key features of the current health insurance system in the U.S. and calibrate the model using the Medical Expenditures Panel Survey dataset. We find that the reform decreases the number of uninsured more than twice and generates substantial welfare gains. However, these welfare gains mostly come from the redistributive measures embedded in the reform. If the reform only reorganizes the individual market, introduces individual mandates but does not include any income-based transfers, the welfare gains are much smaller. This result is mostly driven by the fact that most uninsured people have low income. |
| Keywords: | health insurance; health reform; risk sharing; general equilibrium |
| JEL: | E65 D91 D52 E21 I10 |
| Date: | 2012–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41193&r=ias |
| By: | Gonulal, Serap O.; Goulder, Nick; Lester, Rodney |
| Abstract: | Bancassurance is the process of using a bank's customer relationships to sell life and non-life insurance products. In some developed countries it has had a dramatic impact on developing sales volumes, attaining market shares in excess of 50 percent in life and more than 10 percent in non-life. By contrast, in other developed countries it has had much lower impact. Its strategic benefits to developing countries are wide ranging. This paper discusses the potential of Bancassurance to contribute to the growth and the stability that both life and non-life insurance products can bring to developing countries. The details of how some approaches work better than others, and how regulation and consumer protection issues can impact such development, are reviewed here, together with a discussion of regulatory policy issues and recommendations for best practice. The paper provides a detailed study of the operation of Bancassurance in a major developed market (France). This is contrasted with a further study in a developing market (Mexico). A short summary draws together the key implications for developing countries. |
| Keywords: | Banks&Banking Reform,Debt Markets,Emerging Markets,Insurance Law,Insurance&Risk Mitigation |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6196&r=ias |