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on Insurance Economics |
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Issue of 2020‒01‒13
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | De Donder, Philippe; Leroux, Marie-Louise |
| Abstract: | We study the demand for actuarially fair Long Term Care (LTC hereafter) insurance in a setting where autonomous agents only care for daily life consumption while dependent agents also care for LTC expenditures. We assume that dependency decreases the marginal utility of daily life consumption. We rst obtain that some agents optimally choose not to insure themselves, while no agent wishes to buy complete insurance. We then show that the comparison of marginal utility of income (as opposed to consumption) across health states depends on (i) whether agents do buy LTC insurance at equilibrium or not, (ii) the comparison of the degree of risk aversion for consumption and for LTC expenditures, and (iii) the income level of agents. Our results then oer testable implications that can explain (i) why few people buy Long Term Care insurance and (ii) the discrepancies between various empirical works when measuring the extent of state-dependent preferences for LTC. |
| Keywords: | Long Term Care Insurance Puzzle; Actuarially Fair Insurance; Risk Aversion |
| JEL: | D11 I13 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:123843&r=all |
| By: | Melaku Haile Likka; Shimeles Ololo Sinkie; Berhane Megerssa |
| Abstract: | Use of healthcare services is inadequate in Ethiopia in spite of the high burden of diseases. User-fee charges are the most important factor for this deficiency in healthcare utilization. Hence, the country is introducing community based and social health insurances since 2010 to tackle such problems. This study was conducted cross-sectionally, in March 2013, to assess willingness of rural households to pay for community-based health insurance in Debub Bench district of Southwest Ethiopia. Two-stage sampling technique was used to select 845 households. Selected households were contacted using simple random sampling technique. Double bounded dichotomous choice method was used to illicit the willingness to pay. Data were analyzed with STATA 11. Krinsky and Rob method was used to calculate the mean/median with 95% CI willingness to pay after the predictors have been estimated using Seemingly Unrelated Bivariate Probit Regression. Eight hundred and eight (95.6%) of the sampled households were interviewed. Among them 629(77.8%) households were willing to join the proposed CBHI scheme. About 54% of the households in the district were willing to pay either the initial or second bids presented. On average, these households were willingness to pay was 162.61 Birr per household (8.9 US$) annually. If the community based health insurance is rolled out in the district, about half of households will contribute 163 Birr (8.9 US$) annually. If the premium exceeds the amount specified, majority of the households would not join the scheme. Key words: community based health insurance, willingness to pay, contingent valuation method, double bounded dichotomous choice, Krinsky and Robb, rural households, Ethiopia. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1912.04281&r=all |
| By: | Widayati, Ratna; , Insani |
| Abstract: | Insurance has a very important role in providing certainty protection for people, both commercial and non commercial, insurance can provide protection in the form of education, health, old age, death and property. Which is a necessity of life that is not less important in this era of globalization is the need for insurance services. The definition of insurance under KUHD 246 states that "insurance or coverage is an agreement by which the insurer strikes himself to an insured, accepting a premium, for replacement to him for an event that is not certain".Insurance companies have excellent service quality in serving the Customer including in serving insurance claims, because the quality of this service will be a benchmark for customers if they will use the same service, including for service claims. "Insurance Claim is a claim from the insured party in connection with the existence of the contract between the insurance agreement with the insured person who each party bind themselves to guarantee payment of compensation by the insurer if the insurance premium payment has been made by the insured, when the accident happened suffered by the insured party ". |
| Date: | 2019–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:a35ue&r=all |
| By: | Chunzan Wu; Dirk Krueger |
| Abstract: | We show that a calibrated life-cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri, and Saporta-Eksten (2016) in U.S. data. In the model, 35% of male and 18% of female permanent wage shocks pass through to consumption, compared to the empirical estimates of 32% and 19%: Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply response of the female earner. Abstracting from this private intra-household income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the welfare gains from implementing the optimal system are cut roughly in half. |
| Keywords: | household model, male wages, female wages, income insurance |
| JEL: | E20 H21 D19 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-072&r=all |
| By: | Luigi Guiso (EIEF); Luigi Pistaferri (Stanford University) |
| Abstract: | We review the recent literature on the risk sharing role of the firm. We provide a framework for studying risk sharing between workers and firm owners vis-à-vis firms specific shocks of different nature.We show how this framework can be taken to the data to provide estimates of the extent of insurance within the firm. Estimates from a large number of Western countries strongly support the view that in capitalist economies the firm is a large albeit far from complete wage insurance instrument. We quantify the welfare benefits of firm-provided wage insurance, show evidence on how workers react to firms shockspassed through wages, and discuss the future role of the firm as a wage insurance provider. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:2001&r=all |
| By: | Yang Lu (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study count processes in insurance, in which the underlying risk factor is time varying and unobservable. The factor follows an autoregressive gamma process, and the resulting model generalizes the static Poisson-Gamma model and allows for closed form expression for the posterior Bayes (linear or nonlinear) premium. Moreover, the estimation and forecasting can be conducted within the same framework in a rather efficient way. An example of automobile insurance pricing illustrates the ability of the model to capture the duration dependent, nonlinear impact of past claims on future ones and the improvement of the Bayes pricing method compared to the linear credibility approach. Introduction We propose a time series model for count variables encountered in insurance, when the underlying risk factor is time varying and unobservable. We introduce the au-toregressive gamma process for the latent factor dynamics and show how it provides an integrated framework for the efficient estimation, pricing, and forecasting of the risk. One typical application of the model is automobile insurance, for which the insurer holds the history of individual yearly claim counts over several periods. This information should then be taken into account in order to update the future premium regularly, on an individual basis. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02418950&r=all |
| By: | Cl\'emence Alasseur; Corinne Chaton; Emma Hubert |
| Abstract: | A significant loss of income can have a negative impact on households who are forced to reduce their consumption of some particular staple goods. This can lead to health issues and consequently generates significant costs for society. In order to prevent these negative consequences, we suggest that consumers can buy an insurance to have a sufficient amount of staple good in case they lose a part of their income. We develop a two-period/two-good Principal-Agent problem with adverse selection and endogenous reservation utility to model an insurance with in kind benefits. This model allows us to obtain semi-explicit solutions for the insurance contract and is applied to the context of fuel poverty. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2001.02099&r=all |
| By: | Li, Zhimin; Ligon, Ethan |
| Abstract: | This paper studies informal risk-sharing regimes in a unified framework by examining intertemporal consumption behavior of rural households in Tanzania. We exploit a theoretically-consistent link between interest rates and cross-sectional consumption moments to test alternative risk-sharing models without requiring data on interest rates or assuming a restriction to eliminate the need for such data, which are often unavailable in developing economies. We specify tests that allow us to distinguish among models even with temporal dependence in income shocks. Our analysis shows that the consumption pattern in rural Tanzania is consistent with the self-insurance regime, and that risk aversion varies substantially across districts. Imposing a strict condition on interest rates, as often done in prior literature, misses their intertemporal heterogeneity and biases the estimation of risk aversion. |
| Keywords: | Social and Behavioral Sciences, Risk Sharing, Full Insurance, Self-Insurance, Private Information |
| Date: | 2020–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt50f6t3fh&r=all |
| By: | Baskran, Sumirrta |
| Abstract: | This study examines the performance of the American International Group (AIG) insurance company in terms of dependent and independent variables. This document will also demonstrate the key elements of the business. Other than that, this study has been conducted to apply the principle of corporate governance in any organisation and to ensure that we all understand that any business issues are always starting to get smaller and slowly getting worse. Therefore, safety measures should be taken and principles for corporate governance should be consistently applied. Such research is important to illustrate how the internal and external variables of an organization and the macroeconomic factors influence the degree of corporate governance of a business. |
| Keywords: | corporate governance, dependent variable, independent variable, internal and external variable, ROA, risk, macroeconomics, AIG, performance, significant, coefficient, correlation, ANOVA, descriptive statistics. |
| JEL: | G3 G32 O16 |
| Date: | 2019–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97263&r=all |
| By: | Levon Barseghyan (Institute for Fiscal Studies); Maura Coughlin (Institute for Fiscal Studies); Francesca Molinari (Institute for Fiscal Studies and Cornell University); Joshua C. Teitelbaum (Institute for Fiscal Studies) |
| Abstract: | We propose a robust method of discrete choice analysis when agents’ choice sets are unobserved. Our core model assumes nothing about agents’ choice sets apart from their minimum size. Importantly, it leaves unrestricted the dependence, conditional on observables, between agents’ choice sets and their preferences. We ?rst establish that the model is partially identi?ed and characterize its sharp identi?cation region. We also show how the model can be used to assess the welfare cost of limited choice sets. We then apply our theoretical ?ndings to learn about households’ risk preferences and choice sets from data on their deductible choices in auto collision insurance. We ?nd that the data can be explained by expected utility theory with relatively low levels of risk aversion and heterogeneous choice sets. We also ?nd that a mixed logit model, as well as some familiar models of choice set formation, are rejected in our data. |
| Date: | 2019–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:37/19&r=all |
| By: | Diana, Citra; Tanjung, Mariani St.B |
| Abstract: | The aim of this research is to know whether the transaction system and the calculation of interest on Bank Nagari branch Pariaman villages have been effective in accordance with Regulation deposits contained in the legislation of Republic of Indonesia No. 10 of 1998 which represents a change of the Act No. 7 in 1992 and RI Law No. 4 of 2004 on the deposit insurance agency. This study uses qualitative descriptive method by describing the transaction and whether the system of calculation of interest on deposits at the bank branch pariaman villages have been effective. The data used are primary data in the form of interviews and secondary data in the form of the action plan of PT. Bank Nagari Branch Pariaman. The results showed that the policies and procedures and strategies implemented by PT. Bank Nagari Branch Pariaman in its deposit transaction has been effective in accordance with the minimum standards set by Bank Indonesia which is adapted to the scope of the bank's business. |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:exct7&r=all |
| By: | P-J. Tisserand (LMT); M. Ragueneau |
| Abstract: | Many studies in economics deal with the non-reliability cost to assess insurance fees or investment analyses, but none takes into consideration the mechanical aspect of reliability analysis. Other studies in mechanics give some tools and methods to carry out reliability analyses and fragility study. This study developed a framework where economical and mechanical considerations for infrastructure investment decision-making. The theoretical reasoning is here developed to couple mechanical reliability analyses, which are composed of fragility curves, and economical reliability analyses, which is based on resilience cost functions. This coupling is carried out with some probabilistic considerations, giving the concept of "probable cost of failure". The strength of this framework is that it can be used to analyze all possible critical components in a network with all possible natural hazards or malicious event or other undesired events which it is possible to assess its probability of occurrence. The results of the analysis are indicators of probable cost of failure of an infrastructure, which represents the insurance fee. These indicators can be computed for railway lines, for critical components, for events. This tool enables decision-makers to prioritize safety investments and to guide strategic choices. The next step of this study will be to develop smart data analysis tools, because of this framework needs and produces a lot of data, which must be smartly analyzed and presented. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1912.06410&r=all |
| By: | Leila Aghabarari; Andre Guettler; Mahvish Naeem; Bernardus Van Doornik |
| Abstract: | Credit unions (CUs) may respond to a financial shock differently than other types of banks because of their unique membership-based governance structure. We exploit the financial crisis of 2008/09 as a negative shock to Brazilian banks and analyze the lending behavior of CUs versus those of non-CUs and the subsequent effects on the commercial clients’ labor force. We find evidence that during the financial crisis, CUs tightened access to credit to their members to a lesser extent (insurance effect) than did other bank types. Moreover, compared to non-CUs during the crisis, CUs provided credit with longer maturities and required less collateral, albeit at higher interest rates. Notwithstanding, CUs did not display higher level of non-performing loans on their credit portfolios in comparison to other banks in the crisis period. However, CUs faced relatively higher future default frequencies. Notably, the labor market impact of the insurance effect of CUs is positive for very small firms in the form of an increase in employment and wages in the crisis period. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:511&r=all |
| By: | Choi, Youjin; Holm, Anders; Margolis, Rachel (University of Western Ontario) |
| Abstract: | Paid parental leave from work reserved for mothers and fathers is one policy that has been proposed to equalize labor force participation, wages, and childcare for men and women. We examine the effects of fathers’ use of parental leave on paternal, maternal and family earnings, as well as earnings inequality within the family exploiting the institution of the Quebec Parental Insurance Program which reserved 5 weeks of leave for fathers. We find that ten years after the birth, father’s use of parental leave increases family income and makes wages more equal within the family. |
| Date: | 2019–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:tx2vh&r=all |
| By: | Shah Md. Ahsan Habib |
| Abstract: | Financial sector of Bangladesh is a bank-based system that has been facing a number of challenges alongside operational expansions. In spite of some notable development, performances of certain section of banks have not been praiseworthy in terms of efficiency and soundness parameters. In view of the situation, the financial sector needs directions and appropriate measures to offer due support to attain sustainable growth targets of the country. This secondary data-based study has attempted to analyse the underlying issues related to operations and performances of the banking and financial industry to put forward some necessary regulatory and policy initiatives. For consolidation of the industry, the study recommended for: addressing willful default; revitalising internal control and compliance; ensuring uniform regulatory environment; working for product diversification and exit strategy; addressing financial crime and money laundering; promoting cluster development and financing; endorsing technology-driven and inclusive banking; supporting development of capital, bond and insurance market; and above all, improving corporate governance and leadership. |
| Keywords: | Financial sector Bangladesh, corporate governance |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:pdb:opaper:128&r=all |
| By: | Riatu Mariatul Qibthiyyah (Department of Economics, Faculty of Economics and Business, Universitas Indonesia) |
| Abstract: | During 2013–2016, there are policy changes on Personal Income Tax (PIT) exemption, stated in PMK No. 162/PMK.011/2012, PMK No. 122/PMK.010/2015, and PMK No. 101/PMK.010/2016. Nonetheless, there is no empirical study yet, to my knowledge, that evaluates this policy. An increase of PIT exemptions can be viewed from distributive aspect, of how the incidence (benefit) distributed across taxpayers’ disposable income, as well as on the effciency aspect, whether it has or has not affected labor supply. This study explored on the effciency aspect. The agents – taxpayers as workers – now may experience an increase in net income due to a more generous exemption, and whether the policy of PIT exemption may in?uence taxpayers’ labor supply is more of an empirical question. I use SAKERNAS data from 2010–2018 and estimation model is limited to only consider paid (labor) employment rather than self-employment. On paid (labor) employment, ?rms function as withholding that can extract some of PIT from employee’s salary, and thus paid (labor) employee may then ?le PIT return. My preliminary result shows that effect of PIT exemption policy change is heterogenous across group of population. PIT exemption expansion increases labor supply of paid (labor) employees of the previously lowest income bracket of PIT. However, although to an extent tax saving may be higher for middle to high income individuals, taxpayers referring to individuals in income bracket of 15% rate tend to be not affected by the policy of PIT exemption. |
| Keywords: | personal income tax — tax exemption — labor supply |
| JEL: | H24 J21 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:wpaper:201939&r=all |