|
on Insurance Economics |
|
Issue of 2018‒09‒03
28 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Roman-Urrestarazu, Andres; Yang, Justin C.; Ettelt, Stefanie; Thalmann, Inna; Seguel Ravest, Valeska; Brayne, Carol |
| Abstract: | Background In Germany and Chile, substitutive private health insurance has been shaped by its co-existence with statutory social health insurance. Despite differences in the way choice is available to users in the health insurance regimes of Chile and Germany, the way in which each country has managed choice between private health insurance and statutory social health insurance provides a unique opportunity to comparatively assess the consequences of such an arrangement that has been previously underexamined. Methods We conducted a Most Similar Systems Design comparative policy analysis of the co-occurring private health insurance and statutory social health insurance systems in Germany and Chile. We describe and review the origins and development of the German and Chilean health care insurance systems with an emphasis on the substitutive co-existence between private health insurance and statutory social health insurance. We provide a critique of the market performance of the private health insurance regime in each country followed by a comparative assessment of the impact of private health insurance on financial protection, equity, and risk segmentation. Results Segmentation of insurance markets in both Germany and Chile has had significant consequences for equity, fairness, and financial protection. Due to market failures in health insurance and differences in the regulatory frameworks governing public and private insurers, the choice of public or private coverage has produced strong incentives for private insurers to select for risks, compromising equity in health care funding, heightening the financial risk borne by public insurers and lowering incentives for private insurers to operate efficiently. Conclusions The degree of conflict arising from the substitutive parallel private health insurance system and the statutory social health insurance system varies between Germany and Chile, though policy goals remain similar. Recent reforms in both countries have attempted to improve the financial protection of the privately insured through regulation; nevertheless, concerns about risk segmentation remain largely unresolved. |
| JEL: | F3 G3 |
| Date: | 2018–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90055&r=ias |
| By: | Elira Kuka |
| Abstract: | While the Unemployment Insurance (UI) program is one of the largest safety net program in the U.S., research on its benefits is limited. This paper exploits plausibly exogenous changes in state UI laws to empirically estimate whether UI generosity mitigates any of the previously documented negative health effects of job loss. The results show higher UI generosity increases health insurance coverage and utilization, and leads to improved self-reported health. Moreover, these effects are stronger during periods of high unemployment rates. Finally, I find no effects on risky behaviors nor on health conditions. |
| JEL: | H5 I1 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24766&r=ias |
| By: | Kuka, Elira (Southern Methodist University) |
| Abstract: | While the Unemployment Insurance (UI) program is one of the largest safety net program in the U.S., research on its benefits is limited. This paper exploits plausibly exogenous changes in state UI laws to empirically estimate whether UI generosity mitigates any of the previously documented negative health effects of job loss. The results show higher UI generosity increases health insurance coverage and utilization, and leads to improved self-reported health. Moreover, these effects are stronger during periods of high unemployment rates. Finally, I find no effects on risky behaviors nor on health conditions. |
| Keywords: | unemployment insurance, health |
| JEL: | I1 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11629&r=ias |
| By: | Zhang, Jing; Brown, Colin; Waldron, Scott |
| Abstract: | The paper extends on the literature assessing China’s current “policy-oriented” agricultural insurance crop system to understand and to investigate the factors influencing the relative merits and potential demand for weather index crop insurance as a means for individual farmers in rural China to cope with weather-related production risks. Using the case of Huojia County in Henan Province, an empirical analysis is conducted of information collected from households’ survey and interviews with local village leaders. The key finding is that there is a significant potential demand for weather index crop insurance product as households seek time-efficient risk management strategies although this demand is influenced by generally poor awareness of insurance, small areas, and relatively low profitability of crop production. |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy, Risk and Uncertainty |
| Date: | 2017–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare17:258683&r=ias |
| By: | Mude, Andrew |
| Abstract: | The International Livestock Research Institute (ILRI) together with its partners launched a pilot index-based livestock insurance (IBLI) product in January 2010 in the Marsabit District of northern Kenya. It has since been scaled across the drylands of Kenya, and is also gaining momentum in Ethiopia where a pilot insurance project was launched in 2012. One problem inspired ILRI’s IBLI agenda: finding a sustainable way to help pastoralists to recover quickly from the considerable losses they incur during severe droughts. Over the years, evidence of IBLI impact and value for money, and continued research and development on product design, as well as innovations along the service delivery chain, have helped with uptake, in convincing governments and development partners of its importance as a risk management tool, and have won IBLI a plethora of international awards.Briefly describing the key elements of the IBLI agenda, this presentation focuses on how the IBLI team leveraged a suite of digital technologies – largely mobile based – to help surmount some of the main obstacles to the provision of IBLI. Even in the sparsely populated drylands of northern Kenya, which the IBLI product targets, socioeconomic evolution has resulted in a growing density of mobile network coverage and a proliferation of mobile phone ownership, and use. Exploiting this trend, the IBLI team and partners have developed mobile applications for offline sales transactions and drastically reduced the cost and time to delivery of indemnity payments, as well as a whole host of other applications in information exchange and knowledge dissemination. |
| Keywords: | Agricultural Finance, Livestock Production/Industries |
| Date: | 2017–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:cfcp17:266633&r=ias |
| By: | Amanda Starc; Ashley Swanson |
| Abstract: | Selective contracting is an increasingly popular tool for reducing health care costs, but these savings must be weighed against consumer surplus losses from restricted access. In both public and private prescription drug insurance plans, issuers utilize preferred pharmacy networks to reduce drug prices. We show that, in the Medicare Part D program, drug plans with more restrictive preferred pharmacy networks, and plans with fewer enrollees who are insensitive to preferred pharmacy discounts on copays, pay lower retail drug prices. We then use estimates of plan and pharmacy demand to estimate the first-order costs and benefits of selective contracting in the presence of enrollees with heterogeneous sensitivity to preferred supplier incentives. |
| JEL: | I13 L1 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24862&r=ias |
| By: | Hanming Fang (Department of Economics, University of Pennsylvania); Zenan Wu (Department of Economics, Peking University) |
| Abstract: | We analyze how the life settlement market - the secondary market for life insurance - may affect consumer welfare in a dynamic equilibrium model of life insurance with one-sided commitment and overconfident policyholders. As in Daily et al. (2008) and Fang and Kung (2010), policyholders may lapse their life insurance policies when they lose their bequest motives; but in our model the policyholders may underestimate their probability of losing their bequest motive, or be overconfident about their future mortality risks. For the case of overconfidence with respect to bequest motives, we show that in the absence of life settlement overconfident consumers may buy too much" reclassiffication risk insurance for later periods in the competitive equilibrium. In contrast, when consumers are overconfident about their future mortality rates in the sense that they put too high a subjective probability on the low-mortality state, the competitive equilibrium contract in the absence of life settlement exploits the consumer bias by offering them very high face amounts only in the low-mortality state. In both cases, life settlement market can impose a discipline on the extent to which overconfident consumers can be exploited by the primary insurers. We show that life settlement may increase the equilibrium consumer welfare of overconfident consumers when they are sufficiently vulnerable in the sense that they have a sufficiently large intertemporal elasticity of substitution of consumption. |
| Keywords: | life insurance, secondary market, overconfidence |
| JEL: | D03 D86 G22 L11 |
| Date: | 2017–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:17-005&r=ias |
| By: | Joseph E. Stiglitz; Jungyoll Yun; Andrew Kosenko |
| Abstract: | We study the Rothschild-Stiglitz model of competitive insurance markets with endogenous information disclosure by both firms and consumers. We show that an equilibrium always exists, (even without the single crossing property), and characterize the unique equilibrium allocation. With two types of consumers the outcome is particularly simple, consisting of a pooling allocation which maximizes the well-being of the low risk individual (along the zero profit pooling line) plus a supplemental (undisclosed and nonexclusive) contract that brings the high risk individual to full insurance (at his own odds). We show that this outcome is extremely robust and Pareto efficient. |
| JEL: | D82 D83 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24711&r=ias |
| By: | Borman, Julia; Vergara, Oscar |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256336&r=ias |
| By: | Capitaine, G.; Frey, L. |
| Abstract: | Dans un contexte de taux bas, le niveau des taux de revalorisation servis aux assurés appelle une vigilance particulière du superviseur, au regard de ses objectifs de contrôle prudentiel et de suivi des pratiques commerciales en assurance-vie. Le taux de revalorisation moyen des fonds euros des contrats individuels, net de frais de chargement (mais avant prélèvements sociaux), pondéré par les provisions mathématiques correspondantes, s’élève à 1,93 % au titre de 2016 après 2,27% au titre de 2015 et 2,54% au titre de 2014.. |
| Keywords: | assurance-vie, revalorisation, rachats. |
| JEL: | G22 G28 D14 D18 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:analys:84-1&r=ias |
| By: | Zacharias, Tom |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256310&r=ias |
| By: | Claassen, Roger; Bowman, Maria; Breneman, Vince; Wade, Tara; Williams, Ryan; Fooks, Jacob; Hansen, LeRoy; Iovanna, Rich; Loesch, Chuck |
| Abstract: | Conservation Compliance ties eligibility for most Federal farm program benefits to soil and wetland conservation. To be eligible for farm program benefits, farmers must apply an approved soil conservation system on highly erodible cropland (Highly Erodible Land Conservation, or HELC) and refrain from draining wetlands (Wetland Conservation, or WC). Conservation Compliance is effective when the incentive—the farm program benefits that could be lost due to noncompliance—exceeds the cost of meeting soil and wetland conservation requirements. HELC significantly reduced soil erosion on highly erodible cropland and may have also encouraged erosion reduction on land not subject to HELC. Compliance incentives (farm program benefits) under the Agricultural Act of 2014 are found to (1) vary widely across farms with cropland in HEL (highly erodible land) fields, (2)approximate the overall level of incentive that would have been provided under an extension of the 2008 Farm Act (although incentives changed significantly on many farms), and (3) be significantly lower on many farms if crop insurance premium subsidies were not subject to Conservation Compliance. Compliance incentives for WC, although measured only in the Prairie Pothole region of the Northern Plains, are clearly larger than Compliance costs for an estimated 75 percent of wetlands that are already cropped or have characteristics (e.g., productivity, topography) that are favorable to crop production. |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy |
| Date: | 2017–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:261814&r=ias |
| By: | Schnitkey, Gary; Woodard, Joshua; Sherrick, Bruce |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256331&r=ias |
| By: | David Fuller (University of Wisconsin-Oshkosh); Damba Lkhagvasuren (Concordia University, Montreal, Canada); Stephane Auray (CREST-Ensai) |
| Abstract: | From 1989-2012, on average 23% of those eligible for unemployment insurance (UI) benefits in the US did not collect them. In a search model with matching frictions, asymmetric information associated with the UI non-collectors implies an inefficiency in non-collector outcomes. This inefficiency is characterized along with the key features of collector vs. non-collector allocations. Specifically, the inefficiency implies that non-collectors transition to employment at a faster rate and a lower wage than the efficient levels. Quantitatively, the inefficiency amounts to 1.71% welfare loss in consumption equivalent terms for the average worker, with a 3.85% loss conditional on non-collection. With an endogenous take-up rate, the unemployment rate and average duration of unemployment respond significantly slower to changes in the UI benefit level, relative to the standard model with a 100% take-up rate. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:496&r=ias |
| By: | Belasco, Eric |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256315&r=ias |
| By: | Johnsen, Reid; Ligon, Ethan; Schatzberg, Madeline |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256330&r=ias |
| By: | Yu, Jisang; Vandeveer, Monte; Volesky, Jerry |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256327&r=ias |
| By: | Cormac O'Dea (Yale University) |
| Abstract: | Government pension spending in advanced economies can be divided into three types: (1) Social Security-style benefits that depend on earnings during working life, (2) subsidies of private pension saving and (3) means-tested income floors provided to the elderly. Using an estimated lifecycle model that accounts for each of these, as well as endogenous labour supply, private savings and realistic uncertainty, this paper investigates the optimal combination of the three approaches. For countries (such as the US and the UK) that currently provide public pensions that depend on career-average earnings, I show that large welfare gains can be obtained by increases in the level of means-tested old-age income floors that are funded by any of reducing public pensions, increasing taxes or (especially) reducing private pension subsidies. While means-tested transfers cause costly distortions, these are more than offset by the value of the insurance they provide against low lifetime earnings potential. The optimality of greater means-tested support is specific to older individuals: I find that such support to younger households should be at a much lower level than that to the elderly. These results imply that governments should provide strong work incentives for the young, but provide pensions with good insurance properties for the old. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1037&r=ias |
| By: | Hampus Engsner; Kristoffer Lindensj\"o; Filip Lindskog |
| Abstract: | The aim of this paper is to define the market-consistent multi-period value of an insurance liability cash flow in discrete time subject to repeated capital requirements, and explore its properties. In line with current regulatory frameworks, the approach presented is based on a hypothetical transfer of the original liability and a replicating portfolio to an empty corporate entity whose owner must comply with repeated one-period capital requirements but has the option to terminate the ownership at any time. The value of the liability is defined as the no-arbitrage price of the cash flow to the policyholders, optimally stopped from the owner's perspective, taking capital requirements into account. The value is computed as the solution to a sequence of coupled optimal stopping problems or, equivalently, as the solution to a backward recursion. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1808.03328&r=ias |
| By: | Buchholz, Matthias; Musshoff, Oliver |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256326&r=ias |
| By: | Miao, Ruiqing |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256314&r=ias |
| By: | Bozic, Marin; Woodard, Joshua; Newton, John |
| Keywords: | Risk and Uncertainty |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:scc017:256313&r=ias |
| By: | Naoki Aizawa (University of Minnesota); Serena Rhee (University of Hawaii Manoa); Soojin Kim (Purdue University) |
| Abstract: | This paper studies how to optimally design subsidies for disabled workers, accounting for both the worker- and firm-side responses in the labor market. We first provide empirical evidence that firms design job characteristics, such as the flexibility of work hours, to screen out disabled workers. Then, we develop an equilibrium labor market model where firms post a screening contract which consists of wage and job characteristics; and workers with different levels of disability make labor supply decisions. We estimate the model using the Health and Retirement Study data, and identify the key model parameters by exploiting the exogenous policy variation on employment (hiring) subsidies for the disabled. Using the estimated model, we quantify the policy impacts on workers’ labor supply and firms’ employment contract design. Then, we characterize the optimal mix of the disability insurance and employment (hiring) subsidies for the disabled and study their implications on equilibrium labor market outcomes for workers of different health statuses. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:359&r=ias |
| By: | CAPITAINE, Gaëlle; BONTEMPS-CHANEL, Anne-Lise; CARLIER, Charles-Henri; FREY, Laure; GIRAUD, Christophe |
| Abstract: | Dans le contexte de taux d’intérêt bas persistants, le niveau des revalorisations attribuées par les organismes d’assurance aux polices d’assurance-vie et aux bons de capitalisation appelle une vigilance particulière de l’autorité de supervision, tant au regard du contrôle prudentiel que de la bonne exécution des termes contractuels et des dispositions afférant à la participation aux résultats. |
| Keywords: | assurance-vie, retraite, revalorisation, taux technique. |
| JEL: | G22 G28 D14 D18 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:analys:94&r=ias |
| By: | Linlin Tian; Xiaoyi Zhang |
| Abstract: | In this paper we assume the insurance wealth process is driven by the compound Poisson process. The discounting factor is modelled as a geometric Brownian motion at first and then as an exponential function of an integrated Ornstein-Uhlenbeck process. The objective is to maximize the cumulated value of expected discounted dividends up to the time of ruin. We give an explicit expression of the value function and the optimal strategy in the case of interest rate following a geometric Brownian motion. For the case of the Vasicek model, we explore some properties of the value function. Since we can not find an explicit expression for the value function in the second case, we prove that the value function is the viscosity solution of the corresponding HJB equation. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1807.08081&r=ias |
| By: | Hungerford, Ashley; Astill, Gregory; Effland, Anne |
| Abstract: | ERS examines impacts of the Buy-Up coverage addition to the Noninsured Crop Disaster Assistance Program (NAP) on expected payments, producers' risk reduction, and NAP enrollment by type of producer and crops. |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, Risk and Uncertainty |
| Date: | 2017–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersib:262132&r=ias |
| By: | Cipollaro, Maria; Sacchelli, Sandro |
| Abstract: | The projections for climate change in the coming decades highlight that European and Mediterranean forests will have to deal with negative biotic and abiotic impacts. Extreme meteorological events seem to be one of the main source of risk. Financial strategies can be a form of risk management. In this framework the work analyse the Willingness to Stipulate forest insurance schemes at national level by owners and managers of stands, based on owners characteristics, forest typology and localization as well as Willingness To Pay. Results are also defined at spatial level (macroregions for Italy: northern, central and southern regions) in order to be compared with premium. Preliminary results confirm how WTP is related with both statistical and perceived risk of damage. Moreover, forest owners appear more available to pay for insurance in case of high forest (in particular coniferous) in respect to coppices. Among motivations for not stipulating insurance, the main reason seems to be the preference for alternative form of risk management (e.g. post-event public compensation or silvicultural interventions). The paper stresses the difference between premium and WTP depicting the area where public subsidy could have a greater impact for insurance diffusion. Finally, discussion for future improvements and integration of the research are performed. |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy |
| Date: | 2018–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea18:275647&r=ias |
| By: | Si Guo; Futoshi Narita |
| Abstract: | Pacific island countries are exposed to significant risks from natural disasters. As a disaster relief measure, Fiji allowed pre-retirement pension withdrawls in the wake of Cyclone Winston in 2016. Motivated by this policy action, we provide a normative analysis of the use of early pension withdrawals after disasters, by setting up a life-cycle saving model with myopic households facing large natural disaster shocks. The model demonstrates the key trade-off between building up sufficient retirement savings and ensuring the access to savings against natural disaster shocks, and sheds light on welfare implications of early pension withdrawals. |
| Keywords: | Fiji;Insurance;Asia and Pacific;Small states;Life-cycle model, Natural disasters, Pension, Social Security and Public Pensions |
| Date: | 2018–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/155&r=ias |