nep-ias New Economics Papers
on Insurance Economics
Issue of 2006‒07‒15
nine papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Factoring affecting the Demand for Health Insurance in a Micro Insurance Scheme By Bhat Ramesh; Jain Nishant
  2. Agent-based Investigation of Price Inflation In Health Insurance By Carl A. Johnston
  3. Insurance for the Poor? By Stefan Dercon (QEH), Tessa Bold, Cesar Calvo
  4. Membership Based Indigenous Insurance Associationsin Ethiopia and Tanzania By Stefan Dercon (QEH), Joachim De Weerdt, Tessa Bold, Alula Pankhurst
  5. Brauchen wir einen Kombilohn? By Alfred Boss
  6. Comparing Value-at-Risk Methodologies By Luiz Renato Lima; ; Breno Pinheiro Néri
  7. Willingness to Pay for Road Safety and Estimates of the Risk of Death: Evidence from a Swedish Contingent Valuation Study By Andersson, Henrik
  8. Willingness to pay for a reduction in the mortality risk after a myocardial infarction: an aplication of the contingent valuation method to the case of eplerenone By Jose Luis Pinto-Prades; Veronica Farreras; Jaime Fernández de Bobadilla
  9. Simulating the Formation of Risk Perception By Jie-Shin Lin

  1. By: Bhat Ramesh; Jain Nishant
    Abstract: Health insurance schemes are increasingly recognised as preferable mechanisms to finance health care provision. In this direction micro health insurance schemes and community based health insurance schemes are assuming significant importance in reaching large number of people. However, at the community level despite low premiums the penetration of health insurance is small. The objective of this paper is to analyse factors determining the demand for private health insurance in a micro insurance scheme setting. The study uses two-stage model to examine this issue. First, we determine the factors which affect the insurance purchase decisions and at second level we focus on studying factors which affect the amount of insurance purchase using Heckman two-stage estimation procedure. The data of this study is based on survey and collection of primary data from the Anand district of Gujarat where Charotar Arogya Mandal is offering a health insurance scheme. The results indicate that income and healthcare expenditure are significant determinants of health insurance purchase. Age, coverage of illnesses and knowledge about insurance were also found to be affecting health insurance purchase decision positively. For the decision regarding amount of health insurance purchase, income was found to be having significant but non-linear relationship. In addition, number of children in the family, age, and perception regarding future healthcare expenditure were also found to be significant. The study discusses implications of these results.
    Date: 2006–07–05
  2. By: Carl A. Johnston (Interdisciplinary Center for Economic Science, George Mason University)
    Date: 2006–07–04
  3. By: Stefan Dercon (QEH), Tessa Bold, Cesar Calvo
    Abstract: Uninsured risk has substantial welfare costs, not just in the short run, but also in terms of perpetuating poverty. This paper discusses the scope for extending insurance to the poor in LAC countries. It is argued that insurance provision to the poor could play an important role in a comprehensive system of protection against risk, including other ex-ante measures such as promoting credit and savings as insurance, as well as a credible overall ex-post safety net. Insurance provision is best promoted via a partner-agent model, in which a local finance institution with close links to relatively poor communities teams up with an established insurer to deliver low cost, tailored products, and possible products include life, health, property and weather insurance. An essential role of the government would be to promote insurance provision to the poor by a relevant regulatory framework favouring MFIs within a partner-agent setup, and to provide overall credibility to the overall system of social protection. The paper also argues for the involvement of local indigenous risk-sharing and finance institutions as intermediaries to maximise the ability to reach the poor and the overall welfare benefits
  4. By: Stefan Dercon (QEH), Joachim De Weerdt, Tessa Bold, Alula Pankhurst
    Abstract: Indigenous insurance associations are a prevalent form of membership based organisations of the poor, at least in the rural areas in Ethiopia and Tanzania surveyed by the authors. Results show how villagers with few links to any formal kind of insurance market have established membership-based indigenous insurance associations to protect themselves against unexpected expenditures, mainly for funerals and hospitalisation. Many of these institutions tend to co-exist within the same community and are based on well-defined rules and regulations, well beyond informal reciprocal relations. They tend to offer premium-based insurance for funeral expenses, as well as, in many cases, other forms of insurance and credit to help address hardship. These groups are completely owned and managed by their members. They were locally initiated and have been continually developing through the actions of their own members, without involvement from the government or donors. Using detailed group membership data linked to household survey data we show that (i) these institutions are widely prevalent in the surveyed areas, (ii) households typically belong to several groups at the same time, (iii) they display a large degree of inclusiveness and (iv) they insure an important part of some shocks, but still leave households prone to the effects of risk
  5. By: Alfred Boss
    Abstract: Wage subsidies and public transfers for the unemployed as a means for increasing employment have been intensively discussed in Germany. The paper explains which models have already been applied. In addition, it describes some recent reform proposals and analyzes what economic policy might be capable of doing. It is concluded that new models of wage subsidization are not actually necessary because there is a comprehensive model called “unemployment benefit II”. Instead, the reduction of the rate of contributions to the unemployment insurance system should be considered as a useful policy option.
    Keywords: Arbeitslosigkeit, Lohnzuschuss, Kombilohn, Arbeitslosengeld II, Beitragsermäßigung
    JEL: H24 J38
    Date: 2006–06
  6. By: Luiz Renato Lima (Graduate School of Economics Getúlio Vargas Foundation); ; Breno Pinheiro Néri
    Keywords: ARCH Quantile Value-at-Risk
    JEL: C52 C53
    Date: 2006–07–04
  7. By: Andersson, Henrik (VTI)
    Abstract: We examine how WTP for a reduction in road-mortality risk varies with different individual characteristics and how subjective mortality-risk estimates differ from objective (statistical) mortality-risk values. Using data from a Swedish contingent valuation study, we find some support that WTP declines with age and background risk, but we find no support that WTP varies with health status. Further, we find that respondents underassess their own mortality risks, both road- and total-mortality risks, compared to the objective risk measures for Sweden at the time of the survey.
    Keywords: age; background risk; contingent valuation; health status; willingness to pay; risk perception; road safety
    JEL: C51 D61 J28
    Date: 2006–07–04
  8. By: Jose Luis Pinto-Prades (Department of Economics, Universidad Pablo de Olavide); Veronica Farreras (Department of Applied Economics. Universidad Autónoma de Barcelona); Jaime Fernández de Bobadilla (Pfizer)
    Abstract: Background: In order to allocate health care resources more efficiently it is necessary to relate health improvements provided by new medicines with their cost. It is necessary to ascertain when the additional cost of introducing a new health technology is justified by the additional health gain produced. Eplerenone is a new medicine that reduces the risk of death after myocardial infarction (MI) but produces additional cost to the health system. The contingent valuation approach can be used to measure the monetary value of this risk reduction. Objective: to estimate society’s willingness to pay (WTP) for a new medicine that reduces by 2% the risk of death after MI. Methods: We used a contingent valuation approach to evaluate WTP amongst members of the general population. We used the ex-ante and the ex-post approach. In the ex-ante approach subjects are asked if they would accept an increase in their taxes in order to have access to Eplerenone should they need it in the future. In the ex-post approach subjects are asked if they would pay a certain amount of money as co-payment per month during five years if they suffered a MI. We used the Dichotomous Choice method, using five bids in each approach. The WTP was estimated using both single-bound and double-bound dichotomous choice (SBDC, DBDC). Extensive piloting (n=187) preceded the final survey (n=350). Results: The WTP in the ex-ante case was €58 per year under both SBDC and DBDC. In the ex-post case monthly WTP was €144 for the SBDC and €85 for the DBDC. Subjects with higher income and subjects with a higher perception of risk showed a higher WTP (p<0.05). Conclusions: Society is willing to pay an additional amount of money in order to give Eplerenone to present and future patients. We estimate that €85 per month is a conservative estimate of the monetary value of a 2% risk reduction in mortality after MI and to spend this additional amount of money in Eplerenone can be considered an efficient policy.
    Keywords: contingent valuation, myocardial infarction, mortality, cost-benefit.
    JEL: I10
    Date: 2006–07
  9. By: Jie-Shin Lin (Public Policy and Management I-Shou University)
    Keywords: Risk Perception, Smoking, Learning
    JEL: I1
    Date: 2006–07–04

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