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on Insurance Economics |
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Issue of 2020‒08‒17
eighteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Danielle Chelminsky; Alena Tourtellotte; Erin Weir Lakhmani |
| Abstract: | This technical assistance tool explains how states can identify aligned and unaligned enrollees within their dually eligible populations through two methods: (1) accessing CMS data on Medicare plan enrollment and matching it with Medicaid plan enrollment data; or (2) collecting aligned enrollment data directly from D-SNPs. |
| Keywords: | D-SNP, dually eligible individuals, aligned enrollment, Medicaid managed care |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9d7cc50c4cf04e61aed4cfc5032e3259&r=all |
| By: | Maria Mercè Claramunt (UB - Universitat de Barcelona); Maite Màrmol |
| Abstract: | Most insurance policies include a deductible, so that a part of the claim is assumed by the insured. In order to get a full coverage of the claim, the insured has two options: hire a Zero Deductible Insurance or take out an insurance policy with deductible and, simultaneously, a Refundable Deductible Insurance. The objective of this paper is to analyze these two options, comparing the premium paid. We define dif (F) as the difference between the premiums paid. This function depends on the parameters of the deductible applied, and we focus our attention on the sign of this difference and the calculation of the optimal deductible, that is, the values of the parameters of the deductible that allows us to obtain the greatest reduction in the global premium. |
| Keywords: | premium calculation,variance criterion,optimization |
| Date: | 2020–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02909299&r=all |
| By: | Erin Weir Lakhmani |
| Abstract: | This technical assistance tool explains how states can use the Medicare Modernization Act (MMA) files exchange with the Centers for Medicare and Medicaid Services (CMS) to identify dually eligible individuals (those who receive or are eligible to receive Medicare and Medicaid benefits). |
| Keywords: | D-SNP, dually eligible individuals, aligned enrollment, Medicaid managed care, MMA |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:dba9e0cee57745eab6699683d6418271&r=all |
| By: | Krueger, Dirk; Wu, Chunzan |
| 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. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14108&r=all |
| By: | Christine Sevilla-Dedieu (Fondation MGEN pour la santé publique); Nathalie Billaudeau (Fondation MGEN pour la santé publique); Alain Paraponaris (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université, ORS PACA - Observatoire régional de la santé Provence-Alpes-Côte d'Azur [Marseille]) |
| Abstract: | Background: Compared to the number of studies performed in the United States, few studies have been conducted on the link between health insurance and healthcare consumption in Europe, likely because most European countries have compulsory national health insurance (NHI) or a national health service (NHS). Recently, a major French private insurer, offering voluntary complementary coverage in addition to the compulsory NHI, replaced its single standard package with a range of offers from basic coverage (BC) to extended coverage (EC), providing a quasi-natural experiment to test theoretical assumptions about consumption patterns. Methods: Reimbursement claim data from 85,541 insurees were analysed from 2009 to 2018. Insurees who opted for EC were matched to those still covered by BC with similar characteristics. Difference-indifferences (DiD) models were used to compare both the monetary value and physical quantities of healthcare consumption before and after the change in coverage. Results: As expected, the DiD models revealed a strong significant, though transitory (mainly during the first year), increase after the change in coverage for EC insurees, particularly for costly care such as dental prostheses and spectacles. Surprisingly, consumption seemed to precede the change in coverage, suggesting that one possible determinant of opting for more coverage may be previous unplanned expenses. Conclusion: Both catching-up behaviour and moral hazard are likely to play a role in the increase observed in healthcare consumption. |
| Keywords: | Complementary health insurance,Moral hazard,Healthcare consumption,Longitudinal data,Exact matching,Difference-in-differences |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02879319&r=all |
| By: | Olivier Cabrignac (SCOR, 5 Avenue Kléber, 75795 Paris, France); Arthur Charpentier (Université du Québec à Montréal (UQÀM), 201, avenue du Président-Kennedy, Montréal (Québec), H2X 3Y7, Canada); Ewen Gallic (Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, AMSE, Marseille, France.) |
| Abstract: | Family history is usually seen as a significant factor insurance companies look at when applying for a life insurance policy. Where it is used, family history of cardiovascular diseases, death by cancer, or family history of high blood pressure and diabetes could result in higher premiums or no coverage at all. In this article, we use massive (historical) data to study dependencies between life length within families. If joint life contracts (between a husband and a wife) have been long studied in actuarial literature, little is known about child and parents dependencies. We illustrate those dependencies using 19th century family trees in France, and quantify implications in annuities computations. For parents and children, we observe a modest but significant positive association between life lengths. It yields different estimates for remaining life expectancy, present values of annuities, or whole life insurance guarantee, given information about the parents (such as the number of parents alive). A similar but weaker pattern is observed when using information on grandparents. |
| Keywords: | annuities; collaborative data; dependence; family history; genealogy; grandparents-grandchildren; information; joint life insurance; parents-children; whole life insurance |
| JEL: | C13 C18 C46 C55 J11 J12 G22 G32 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2021&r=all |
| By: | Andinet Woldemichael; Daniel Gurara; Abebe Shimeles |
| Abstract: | Achieving universal health coverage, including financial risk protection and access to quality essential health-care services, is one of the main Sustainable Development Goals. In low-income countries, innovative and affordable health financing systems are key to realize these goals. This paper assesses the impacts of Community-Based Health Insurance Scheme in Rwanda on health-related financial risks using a nationally representative household survey data collected over a ten-year period. We find that the scheme significantly reduce annual per capita out-of-pocket spending by about 3,600 Rwandan Franc (about US$12) or about 83 percent of average per capita healthcare expenditure compared to the baseline level in 2000.The impacts however favor the rich as compared to the poor. The program also reduces the incidence of catastrophic healthcare spending significantly. |
| Keywords: | Consumer price indexes;Demographic indicators;Health insurance;Poverty;Health care;Healthcare spending,low-income,Rwanda,out-of-pocket,treatment effect,endogeneity,quartile,healthcare service |
| Date: | 2019–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/038&r=all |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | In this study, we assess the relevance of decreasing information asymmetry on life and non-life insurance consumption, by using data from 48 African countries during the period 2004-2014. Reduced information asymmetry is proxied by information sharing offices, namely: public credit registries and private credit bureaus. The empirical evidence is based on the Generalised Method of Moments. The findings show that information sharing offices increase insurance consumption with a comparatively higher magnitude in life insurance penetration, relative to non-life insurance penetration. Practical and theoretical implications are discussed. |
| Keywords: | Insurance; Information Asymmetry |
| JEL: | I30 G20 G22 O16 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/057&r=all |
| By: | Karahan, Fatih; Mitman, Kurt; Moore, Brendan |
| Abstract: | We develop a method to jointly measure the response of worker search effort (individual effect) and vacancy creation (market-level effect) to changes in the duration of unemployment insurance (UI) benefits. To implement this approach, we exploit an unexpected cut in UI durations in Missouri and provide quasi-experimental evidence on the effect of UI on the labor market. The data indicate that the cut in Missouri significantly increased job finding rates by both raising the search effort of unemployed workers and the availability of jobs. The latter accounts for at least a third and up to 100 of the total effect. |
| Keywords: | search; unemployment; Unemployment insurance; Vacancies |
| JEL: | E24 J63 J64 J65 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14158&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | This study assesses how enhancing information and communication technology (ICT) affects life insurance and non-life insurance in a panel of forty-eight African countries with data for the period 2004-2014. The adopted ICT dynamics are: mobile phone penetration, internet penetration and fixed broadband subscriptions. The empirical evidence is based on Generalized Method of Moments. The results show that enhancing mobile phone penetration and fixed broadband subscriptions has a positive net effect on life insurance consumption while enhancing fixed broadband subscriptions also has a positive net impact of on non-life insurance penetration. |
| Keywords: | Insurance; Information technology |
| JEL: | I28 I30 L96 O16 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102060&r=all |
| By: | Blanchard, Emily; Bown, Chad P.; CHOR, HAN PING DAVIN |
| Abstract: | We findthat Republican candidates lost support in the 2018 US congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war (respectively, health care) can account for five (eight) of Republicans' lost House seats. |
| Keywords: | Agricultural Subsidies; Health Insurance Coverage; Retaliatory Tariffs; trade policy; Trade War; voting |
| JEL: | F13 F14 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14091&r=all |
| By: | Karim Barigou (SAF); Lukasz Delong |
| Abstract: | This paper considers the pricing of equity-linked life insurance contracts with death and survival benefits in a general model with multiple stochastic risk factors: interest rate, equity, volatility, unsystematic and systematic mortality. We price the equity-linked contracts by assuming that the insurer hedges the risks to reduce the local variance of the net asset value process and requires a compensation for the non-hedgeable part of the liability in the form of an instantaneous standard deviation risk margin. The price can then be expressed as the solution of a system of non-linear partial differential equations. We reformulate the problem as a backward stochastic differential equation with jumps and solve it numerically by the use of efficient neural networks. Sensitivity analysis is performed with respect to initial parameters and an analysis of the accuracy of the approximation of the true price with our neural networks is provided. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2007.08804&r=all |
| By: | Karim Barigou (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Lukasz Delong (Warsaw School of Economics - Institut of Econometrics) |
| Abstract: | This paper considers the pricing of equity-linked life insurance contracts with death and survival benefits in a general model with multiple stochastic risk factors: interest rate, equity, volatility, unsystematic and systematic mortality. We price the equity-linked contracts by assuming that the insurer hedges the risks to reduce the local variance of the net asset value process and requires a compensation for the non-hedgeable part of the liability in the form of an instantaneous standard deviation risk margin. The price can then be expressed as the solution of a system of non-linear partial differential equations. We reformulate the problem as a backward stochastic differential equation with jumps and solve it numerically by the use of efficient neural networks. Sensitivity analysis is performed with respect to initial parameters and an analysis of the accuracy of the approximation of the true price with our neural networks is provided. |
| Keywords: | Equity-linked contracts,Neural networks,Stochastic mortality,BSDEs with jumps,Hull-White stochastic interest rates,Heston model |
| Date: | 2020–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02896141&r=all |
| By: | Knighton, James; Buchanan, Brian; Guzman, Christian; Elliott, Rebecca; White, Eric; Rahm, Brian |
| Abstract: | Current research on flooding risk often focuses on understanding hazards, de-emphasizing the complex pathways of exposure and vulnerability. We investigated the use of both hydrologic and social demographic data for flood exposure mapping with Random Forest (RF) regression and classification algorithms trained to predict both parcel- and tract-level flood insurance claims within New York State, US. Topographic characteristics best described flood claim frequency, but RF prediction skill was improved at both spatial scales when socioeconomic data was incorporated. Substantial improvements occurred at the tract-level when the percentage of minority residents, housing stock value and age, and the political dissimilarity index of voting precincts were used to predict insurance claims. Census tracts with higher numbers of claims and greater densities of low-lying tax parcels tended to have low proportions of minority residents, newer houses, and less political similarity to state level government. We compared this data-driven approach and a physically-based pluvial flood routing model for prediction of the spatial extents of flooding claims in two nearby catchments of differing land use. The floodplain we defined with physically based modeling agreed well with existing federal flood insurance rate maps, but underestimated the spatial extents of historical claim generating areas. In contrast, RF classification incorporating hydrologic and socioeconomic demographic data likely overestimated the flood-exposed areas. Our research indicates that quantitative incorporation of social data can improve flooding exposure estimates. |
| Keywords: | FEMA; flooding; flooding insurance claims; LIS-FLOOD; random forest; socio-hydrology; vulnerability |
| JEL: | R14 J01 |
| Date: | 2020–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:105761&r=all |
| By: | Tomaz Cajner; Andrew Figura; Brendan M. Price; David Ratner; Alison E. Weingarden |
| Abstract: | In the spring of 2020, many observers relied heavily on weekly initial claims for unemployment insurance benefits (UI) to estimate contemporaneous reductions in US employment induced by the COVID-19 pandemic. Though UI claims provided a timely, high-frequency window into mounting layoffs, the cumulative volume of initial claims filed through the May reference week substantially exceeded realized reductions in payroll employment and likely contributed to the historically large discrepancy between consensus expectations of further April-to-May job losses and the strong job gains reflected in the May employment report. Analyzing the relationship between UI claims and underlying employment, we argue that insured unemployment--an alternative high-frequency indicator that responds to gross job gains as well as gross job losses--offers important advantages as a barometer of labor market conditions. Adjusting for reporting artifacts and for time lags between employment flows and associated claims, we show that insured unemployment comoved strongly with payroll employment throughout the first months of the pandemic, as it did during the Great Recession. |
| Keywords: | Unemployment insurance; Unemployment; Emergency unemployment benefits; Employment; Business cycle; Economic indicators; COVID-19 |
| JEL: | E24 J65 |
| Date: | 2020–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2020-55&r=all |
| By: | Golosov, Mikhail; Iovino, Luigi |
| Abstract: | We consider optimal public provision of unemployment insurance when government's ability to commit is imperfect. Unemployed persons privately observe arrivals of job opportunities and choose probabilities of communicating this information to the government. Imperfect commitment implies that full information revelation is generally suboptimal. We define a notion of the social value of information and show that, due to the incentive constraints, it is a convex function of the information revealed. In the optimum each person is provided with an incentive to either reveal his private information fully or not reveal any of it, but the allocation of these incentives may be stochastic. In dynamic economies unemployed persons who enter a period with higher continuation utilities reveal their private information with lower probabilities. The optimal contract can be decentralized by a joint system of unemployment and disability benefits in a way that resembles how these systems are used in practice in developed countries. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14116&r=all |
| By: | Tzougas, George; Karlis, Dimitris |
| Abstract: | Regression modelling involving heavy-tailed response distributions, which have heavier tails than the exponential distribution, has become increasingly popular in many insurance settings including non-life insurance. Mixed Exponential models can be considered as a natural choice for the distribution of heavy-tailed claim sizes since their tails are not exponentially bounded. This paper is concerned with introducing a general family of mixed Exponential regression models with varying dispersion which can efficiently capture the tail behaviour of losses. Our main achievement is that we present an Expectation-Maximization (EM)-type algorithm which can facilitate maximum likelihood (ML) estimation for our class of mixed Exponential models which allows for regression specifications for both the mean and dispersion parameters. Finally, a real data application based on motor insurance data is given to illustrate the versatility of the proposed EM-type algorithm. |
| Keywords: | mixed exponential distributions; EM algorithm; regression models for the mean and dispersion parameters; non-life insurance; heavy-tailed losses |
| JEL: | C1 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:104027&r=all |
| By: | Barrett, Chris; Nourani, Vesall; Patacchini, Eleonora; Walker, Thomas |
| Abstract: | Inter-household transfers play a central role in village economies. Whether understood as informal insurance, credit, or social taxation, the dominant conceptual models used to explain transfers rest on a foundation of self-interested dynamic behavior. Using experimental data from households in rural Ghana, where we randomized private and publicly observable cash payouts repeated every other month for a year, we reject two core predictions of the dominant models. We then add impure altruism and social taxation to a model of limited commitment informal insurance networks. The data support this new model's predictions, including that unobservable income shocks may facilitate altruistic giving that better targets less-well-off individuals within one's network, and that too large a network can overwhelm even an altruistic agent, inducing her to cease giving. |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14148&r=all |