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on Insurance Economics |
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Issue of 2020‒08‒24
23 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Jason Furman (Peterson Institute for International Economics) |
| Abstract: | Unemployment insurance in the United States has played a critical role in both protecting workers who lost their jobs and supporting the economy during the COVID-19 pandemic. The abrupt expiration of any form of expanded unemployment insurance at the end of July 2020 would create problems both for the workers directly affected and for the economy as a whole, reducing GDP by about 2.5 percent in the second half of 2020—more than a typical year’s worth of economic growth. Furman emphasizes that expanded unemployment insurance should continue, with adjustments made as the unemployment rate changes. He also points out that the unemployment insurance system had major shortcomings even before the COVID-19 crisis and should be permanently reformed. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb20-10&r=all |
| By: | Nicolas Petrosky-Nadeau |
| Abstract: | Job acceptance decisions weigh the value of an entire job spell relative to remaining unemployed. There exists a reservation level of benefit payments in this dynamic decision problem at which an individual is indifferent between accepting and refusing an offer. This reservation benefit is a simple statistic to test the job acceptance deterrence effects of current unemployment insurance (UI) payments, summarizing the decision problem conditional on the believed state of the labor market and the weeks of UI compensation remaining. Estimating the reservation benefit for a wide range of US workers suggests few would turn down an offer to returnto work at the previous wage under the increased UI payments and extended duration provided by the CARES Act . |
| Keywords: | Unemployment insurance; Job acceptance; COVID-19; Unemployment |
| JEL: | J64 J65 |
| Date: | 2020–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:88541&r=all |
| By: | Marie Scholer (EIOPA); Lazaro Cuesta Barbera (EIOPA) |
| Abstract: | This article investigates how much investment held by insurers may be eligible to the EU sustainable finance taxonomy. To this aim, Solvency II item-by-item investment data is employed. As part of the Green Deal, the Commission presented the European Green Deal Investment Plan, which will mobilize at least €1 trillion of sustainable investments over the next decade. Our results suggest that currently only a small portion of the insurer’s investments are made in economic activities which might be eligible to the EU sustainable finance taxonomy as the insurer’s exposures are mainly concentrating toward financial activities. On one hand, this can be interpreted as an indicator of limited exposure to transition risk for the insurance sector but on the other hand also indicates that insurers have the possibility to contribute more significantly to transitioning to a lower carbon society in the future. As major long-term investors, insurers could play a key role in the transition towards more sustainable society. In this respect, the taxonomy can help insurers by providing clarity in identifying sustainable economic activities and avoiding reputational risks. |
| Keywords: | insurance, sutainable finance, green taxonomy |
| JEL: | G11 G12 G22 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:eio:thafsr:17&r=all |
| By: | Werbeck, Anna; Wübker, Ansgar; Ziebarth, Nicolas R. |
| Abstract: | Using a randomized field experiment, we show that health care specialists cream-skim patients by their expected profitability. In the German two-tier system, outpatient reimbursement rates for both public and private insurance are centrally determined but are more than twice as high for the privately insured. In our field experiment, following a standardized protocol, the same hypothetical patient called 991 private practices in 36 German counties to schedule appointments for allergy tests, hearing tests and gastroscopies. Practices were 7% more likely to offer an appointment to the privately insured. Conditional on being offered an appointment, wait times for the publicly insured were twice as long than for the privately insured. Our findings show that structural differences in reimbursement rates lead to structural differences in health care access. |
| Keywords: | health care inequality,reimbursement rates,health care access,discrimination,cherry picking,gastroscopy,audiometry,allergy test,allergists,otorhinolaryngologist,gastroenterologist |
| JEL: | I14 I11 I18 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:846&r=all |
| By: | International Monetary Fund |
| Abstract: | This review provides an update on the Austrian insurance sector and an analysis of certain key aspects of the regulatory and supervisory regime. The note analyzes regulation and supervision in relation to key issues identified in previous Financial Sector Assessment Programs (FSAP), as well as material changes since the last FSAP. This note also covers the current situation and potential changes in the crisis management and early intervention framework of the insurance sector. It focuses on issues relevant to a long-standing policyholder protection mechanism, early intervention powers—existing and under discussion—and crisis management and resolution arrangements for insurance companies and groups. The analysis recommends that proper implementation of Solvency II needs ongoing validation and scrutiny by regulators, which could be at risk if supervisory resources with skills and expertise are not retained. Higher legal, reputational, and conduct risks are posing additional pressures to the life insurance sector. Market conduct supervision should be enhanced, with active use of enforcement powers in addition to the insights that studies launched by the government will provide. |
| Keywords: | Financial regulation and supervision;Financial crises;Financial markets;Financial institutions;Macroprudential policies and financial stability;ISCR,CR,FMA,insurer,solvency,policyholder,insurance sector |
| Date: | 2020–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2020/063&r=all |
| By: | Lei Fang; Jun Nie; Zoe Xie |
| Abstract: | The CARES Act implemented in response to the COVID-19 crisis dramatically increases the generosity of unemployment insurance (UI) benefits, triggering concerns about its substantial impact on unemployment. This paper combines a labor market search-matching model with the SIR-type infection dynamics to study the effects of CARES UI on both unemployment and infection. More generous UI policies create work disincentives and lead to higher unemployment, but they also reduce infection and save lives. Economic shutdown policies further amplify these effects of UI policies. Quantitatively, the CARES UI policies raise unemployment by an average of 3.7 percentage points over April to December 2020 but also reduce cumulative death by 4.7 percent. Eligibility expansion and the extra $600 increase in benefit level account for more than 90 percent of the total effects, while the 13-week benefit duration extension plays a much smaller role. Overall, UI policies improve the welfare of workers and reduce the welfare of nonworkers, both young and old. |
| Keywords: | COVID-19; CARES Act; unemployment insurance; search and matching |
| JEL: | J64 J65 E24 |
| Date: | 2020–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:88479&r=all |
| By: | Karen Donelan; Yuchiao Chang; Holly Matulewicz; Kimberly Warsett; Dennis Heaphy; Lisa I. Iezzoni |
| Abstract: | Massachusetts One Care was the first program approved among the Centers for Medicare & Medicaid Financial Alignment Demonstrations for dually eligible beneficiaries. |
| Keywords: | Massachusetts One Care, dual eligible beneficiares, disability |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:b3b64eb63d6046ebbb35434e322a6c66&r=all |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | In this study, we examine how insurance affects income inequality in sub-Saharan Africa, using data from 42 countries during the period 2004-2014. Three inequality variables are used, namely: the Gini coefficient, the Atkinson index and the Palma ratio. Two insurance premiums are employed, namely: life insurance and non-life insurance. The empirical evidence is based on the Generalized Method of Moments (GMM). Life insurance increases the Gini coefficient and increasing life insurance has a net positive effect on the Gini coefficient and the Atkinson index. Non-life insurance reduces the Gini coefficient and increasing non-life insurance has a net positive effect on the Palma ratio. The analysis is extended to establish policy thresholds at which increasing insurance premiums completely dampen the net positive effects. From the extended analysis, 7.500 of life insurance premiums (% of GDP) is the critical mass required for life insurance to negatively affect inequality, while 0.855 of non-life insurance premiums (% of GDP) is the threshold required for non-life insurance to negatively affect inequality. Policy thresholds are provided at which insurance penetration decreases income inequality in sub-Saharan Africa. |
| Keywords: | Insurance; Inclusive development; Africa; Sustainable Development |
| JEL: | I28 I30 I32 O40 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:20/005&r=all |
| By: | Petr Jakubik (EIOPA) |
| Abstract: | In an environment of a quick unfolding crisis with high uncertainty, the European Insurance and Occupational Pensions Authority issued on 2nd April 2020 a statement requesting (re)insurers to suspend all discretionary dividend distributions and share buy backs aimed at remunerating shareholders. Although, this should have a positive impact on the overall financial stability of the sector, it could have a negative impact on insurers’ equity prices as a response to the published statement. Hence, this article empirically investigates this potential effect using an event study methodology. Although, negative drops were observed in some cases, the obtained empirical results suggest that they were not statistically significant for the overall European insurers’ equity market when considering the event windows covering a few days after the publication. |
| Keywords: | insurance, dividends, equity market, event study |
| JEL: | G11 G12 G22 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:eio:thafsr:18&r=all |
| By: | Bernardus Ferdinandus Nazar Van Doornik; Dimas Mateus Fazio; David Schoenherr; Janis Skrastins |
| Abstract: | We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces compensating wage differentials risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:523&r=all |
| By: | Andinet Woldemichael (Research Department, African Development Bank) |
| Abstract: | Every year, millions of people suffer from financial catastrophe due to out-of-pocket healthcare payments and most of them are pushed into poverty. This study investigates the impacts of community-based health insurance schemes on health-related financial shocks and poverty, using a nationally representative household survey data from Rwanda. We address issues of selection bias in health insurance enrollment, heterogeneity in treatment effects and non-normality in the outcome variables using Extended Two-Part Model within a Bayesian estimation framework. We find that community-based health insurance schemes reduce the incidence of catastrophic healthcare spending by about 20 percentage points. We also finding that community-based health insurance schemes reduce the headcount poverty rates and the poverty gap due to out-of-pocket healthcare payments by about 8 percentage points and by about 3 USD in 2000 prices, respectively. The estimated treatment effects are however heterogeneous across households. |
| Keywords: | impact, selection bias, endogeneity, health insurance, low-income, community-based JEL Classification: C21, C11, D04, I13, I15 |
| Date: | 2020–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2458&r=all |
| By: | Teresa Ghilarducci; Siavash Radpour; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Social Security provides insurance against the risk of outliving one’s wealth that is valuable to low and high earners alike. Both low and high earners would benefit from Social Security expansion. We propose expanding Social Security by allowing workers to buy extra Social Security benefits. We propose defaulting workers into revenue neutral “Catch-Up” contributions. Starting at age 50, workers would contribute an additional 3.1% of salary. The typical worker would receive additional benefits of $226 a month at retirement. |
| Keywords: | Social Security, Retirement, Catch-Up, Benefits, Savings, Wealth, Older Workers |
| JEL: | J26 H55 J32 E21 D63 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2020-02&r=all |
| By: | International Monetary Fund |
| Abstract: | This chapter on Financial Safety Net and Crisis Management for the Canada reviews the insurance sector’s regulation and supervision. The paper highlights that Canada has a highly developed insurance market that is important to Canada’s economy. Regulation and supervision of the insurance sector in Canada is conducted by the federal and provincial authorities. Insurers can be incorporated under the federal or provincial regime. At the federal level, the Office of the Superintendent of Financial Institutions (OSFI) is responsible for prudential regulation and supervision of federally regulated insurers. The provincial supervisors oversee prudential oversight of provincially regulated insurers and conduct oversight of all insurers operating in their jurisdictions. Federal-provincial cooperation and coordination should be further improved. Group-wide supervision needs improvement in legal foundation and consistency of application. With no legal powers over unregulated holding companies, both OSFI and Autorité des marchés financiers rely on voluntary agreements with the companies to be able to obtain information and apply prudential requirements for the insurance groups. |
| Date: | 2020–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2020/021&r=all |
| By: | Paul Goldsmith-Pinkham; Maxim L. Pinkovskiy; Jacob Wallace |
| Abstract: | Consumer financial strain varies enormously across the United States. One pernicious source of financial strain is debt in collections—debt that is more than 120 days past due and that has been sold to a collections agency. In Massachusetts, the average person has less than $100 in collections debt, while in Texas, the average person has more than $300. In this post, we discuss our recent staff report that exploits the fact that virtually all Americans are universally covered by Medicare at 65 to show that health insurance not only improves financial health on average, but also is a major explanation for the heterogeneity in financial strain across the country. We find that Medicare affects different parts of the United States differently and plays a particularly important role in improving financial health in the least advantaged areas. |
| Keywords: | medicare; collections; commuting zones; heterogeneity; diversity |
| JEL: | D14 I14 |
| Date: | 2020–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:88331&r=all |
| By: | Amelie Schiprowski (University of Bonn) |
| Abstract: | Caseworkers are the main human resources used to provide social services. This paper asks if, and how much, caseworkers matter for the outcomes of unemployed individuals. Using large-scale administrative data, I exploit exogenous variation in unplanned absences among Swiss UI caseworkers. I find that individuals who lose a meeting with their caseworker stay unemployed 5% longer. Results show large heterogeneity in the personal impact of caseworkers: the effect of a foregone meeting is zero for caseworkers in the lower half of the productivity distribution, while it amounts to more than twice the average effect for caseworkers in the upper half. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:016&r=all |
| By: | Teresa Ghilarducci; Siavash Radpour; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Social Security benefits are progressive and offset the unequal distribution of retirement wealth generated by a broken employer-based retirement system. Though Social Security benefits keep retirees out of poverty, American workers still face a retirement income crisis. Policymakers need to strengthen and expand Social Security and mandate employer-sponsored retirement plans to ensure universal coverage and adequate retirement income. |
| Keywords: | Social Security, Retirement, Wealth, Income, Older Workers |
| JEL: | J26 H55 J32 E21 D63 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2020-01&r=all |
| By: | Angell, Mintaka; Burns, Casey; Deneault, Sandra; Doweiko, Donald; Dziembowski, Stephen; Gold, Samantha; Hastings, Justine S.; Howison, Mark; Jensen, Scott; Johnson, Chris |
| Abstract: | Key Insights ● The COVID-19 public health emergency caused widespread economic shutdown. The resulting surge in unemployment and Unemployment Insurance benefits claims threatened to overwhelm the legacy systems state workforce agencies rely on to collect, process, and pay claims. ● In the State of Rhode Island, we developed a scalable cloud solution to collect Pandemic Unemployment Assistance claims robustly and securely. These claims are part of a new program created under the CARES Act that extended Unemployment Insurance benefits to independent contractors and gig-economy workers not covered by traditional Unemployment Insurance programs. ● Our new system was developed, tested, and deployed within ten days following the passage of the CARES Act, making Rhode Island the first state in the country to collect, validate, and pay Pandemic Unemployment Assistance claims. A cloud-enhanced interactive voice response system was deployed a week later to handle the corresponding surge in weekly certifications for continuing unemployment benefits. ● Cloud solutions can augment legacy systems by offloading processes that are more efficiently handled in modern scalable systems, reserving the limited resources of legacy systems for what they were originally designed for. This agile use of combined technologies allowed Rhode Island to deliver timely Pandemic Unemployment Assistance benefits with an estimated cost savings of $502 thousand (representing a 411% return on investment). |
| Date: | 2020–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:p9yk7&r=all |
| By: | Grace Anglin; Deborah Peikes; Dana Petersen; Ann O'Malley; Kristin Geonnotti; Arkadipta Ghosh; Pragya Singh; Ha Tu; Stacy Dale; Kaylyn Swankoski; Dana Jean-Baptiste; Janice Genevro; Sheila Hoag; Katie Morrison Lee; Rosalind Keith; Victoria Peebles; Amanda Markovitz; Min-Young Kim; Sean Orzol; Laura Blue; Ning Fu; Jessica Laird; Lauren Vollmer; Mariel Finucane; Laurie Felland; Linda Barterian; Rumin Sarwar; Jasmine Little; Rachel Machta; Genna Cohen; Mynti Hossain; Melanie Au; Grace Oh; Lee-Lee Ellis; Elizabeth Holland; Randall Brown; et al. |
| Abstract: | The Second Annual Report presents findings from the independent evaluation of the first two years of CPC+ for practices that began the model in 2017. The report examines CPC+ participation, supports, implementation, and early impacts. |
| Keywords: | primary care, comprehensive primary care, healthcare payment reform, Medicare, CMMI, CPC+, evaluation |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ae9f666f4f604ed29a5d089d4649a8c4&r=all |
| By: | Fabrice Borel-Mathurin (ACPR - Autorité de Contrôle Prudentiel et de Résolution - Autorité de Contrôle Prudentiel et de Résolution); Nicole El Karoui (LPMA - Laboratoire de Probabilités et Modèles Aléatoires - UPMC - Université Pierre et Marie Curie - Paris 6 - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique, LPSM UMR 8001 - Laboratoire de Probabilités, Statistiques et Modélisations - UPMC - Université Pierre et Marie Curie - Paris 6 - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique); Stéphane Loisel (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Julien Vedani (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon) |
| Abstract: | The so-called market-consistency of the European life insurance valuation as shaped by regulation guidelines embeds numerous theoretical and practical misstatements. Since El Karoui et al. (2017) the manipulation risk induced by the framework imprecision and, in particular, its high dependency to regulatory and non-regulatory calibration data is clear. In this paper we update some results and analysis of El Karoui et al. (2017) using data from a more recent "classical" year (2017) and from an exceptional year (first quarter of 2020, with Covid-19 effects), and test additional sensitivities. Based on the updated values we obtain up to-45% in the V IF estimates values depending on the swaption implied volatilities matrix used to calibrate the interest rates model. Then trying different calibration sets we obtain up to 105% difference. In parallel, we see that using 3-month averages to calibrate Economic Scenario Generators do not make effects of crises like Covid-19 disappear. We then address the "simulation seed" setting issue, and the interest and limits of keeping the same seed when estimating and comparing economic valuations, be it on horizontal (comparing valuations through time) or vertical (studying sensitivities at the same date) analysis. We finally open our study to propose various tools for a better risk management of economic scenarios and valuation, through a better understanding of Asset-Liability Management models. |
| Date: | 2020–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02905181&r=all |
| By: | Dana Petersen; Ann O'Malley; Arkadipta Ghosh; Kristin Geonnotti; Pragya Singh; Ha Tu; Stacy Dale; Kaylyn Swankoski; Dana Jean-Baptiste; Deborah Peikes; Grace Anglin; Sheila Hoag; Katie Morrison Lee; Rosalind Keith; Victoria Peebles; Amanda Markovitz; Min-Young Kim; Sean Orzol; Laura Blue; Ning Fu; Jessica Laird; Lauren Vollmer; Mariel Finucane; Laurie Felland; Linda Barterian; Rumin Sarwar; Jasmine Little; Genna Cohen; Mynti Hossain; Melanie Au; Grace Oh; Lee-Lee Ellis; Elizabeth Holland; Janice Genevro; Randall Brown; et al. |
| Abstract: | The Second Annual Report Supplemental Volume presents detailed findings from the independent evaluation of the first two years of CPC+ for practices that began the model in 2017. |
| Keywords: | primary care, comprehensive primary care, healthcare payment reform, Medicare, CMMI, CPC+, evaluation |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:fc8e63415a9e417186d7bdfe6e80263f&r=all |
| By: | Retirement Equity Lab (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | An examination of the status of older workers in the third quarter of 2019 reveals two highlights: older workers have higher levels of financial fragility than in 2006, before the Great Recession, and millions of workers who are now nearing retirement lost jobs in the 2008-09 recession, saw their wages fall, and now face increased risk of repeated job loss. Policy recommendations include boosting financial security for older people by strengthening Social Security, creating Guaranteed Retirement Accounts, bolstering unemployment insurance, and creating a federal Older Workers Bureau to protect this growing population in the labor market. |
| Keywords: | older workers, financial fragility, recession, financial security, unemployment, wages, bargaining power |
| JEL: | E24 J30 J38 J60 J88 J58 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapb:2019-03&r=all |
| By: | Arkadipta Ghosh; Sean Orzol; Stacy Dale; Jessica Laird; Ning Fu; Pragya Singh; Min-Young Kim; Amanda Markovitz; Kaylyn Swankoski; Nancy Duda; Rachel Machta; Carol Urato; Mariel Finucane; Lauren Vollmer; Constance Delannoy; Lee-Lee Ellis; Grace Oh; Brianna Sullivan; Dana Jean-Baptiste; Ann O'Malley; Rosalind Keith; Randall Brown; Grace Anglin; Deborah Peikes; et al. |
| Abstract: | The Appendices to the Supplemental Volume provide detailed information about the data, methods, analyses, and findings from the independent evaluation of the first two years of CPC+ for the practices that began the model in 2017. |
| Keywords: | primary care, comprehensive primary care, healthcare payment reform, Medicare, CMMI, CPC+, evaluation |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:b1a34698da70445fb2d655f508e28ccc&r=all |
| By: | Wilson, Tim; Bevan, Gwyn; Gray, Muir; Day, Clara; McManners, Joe |
| Keywords: | NHS; integrated health and social care; commons |
| JEL: | E6 |
| Date: | 2020–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:106182&r=all |