nep-ias New Economics Papers
on Insurance Economics
Issue of 2007‒06‒18
four papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Health insurance status and physician-induced demand for medical services in Germany: new evidence from combined district and individual level data By Hendrik Jürges
  2. Determinants of Insurers’ Performance in Risk Pooling, Risk Management, and Financial Intermediation Activities By Georges Dionne; Robert Gagné; Abdelhakim Nouira
  3. Economic information and finance : more information means more credit, fewer bad loans, and less corruption By Islam, Roumeen
  4. Regression Coefficient Identification Decay in the Presence of Infrequent Classification Errors By Kreider, Brent

  1. By: Hendrik Jürges (Mannheim Research Institute for the Economics of Aging (MEA))
    Abstract: Germany is one of the few OECD countries with a two-tier system of statutory and primary private health insurance. Both types of insurance provide fee-for-service insurance, but chargeable fees for identical services are more than twice as large for privately insured patients than for statutorily insured patients. This price variation creates incentives to induce demand primarily among the privately insured. Using German SOEP 2002 data, I analyze the effects of insurance status and district (Kreis-) level physician density on the individual number of doctor visits. The paper has four main findings. First, I find no evidence that physician density is endogenous. Second, conditional on health, privately insured patients are less likely to contact a physician but more frequently visit a doctor following a first contact. Third, physician density has a significant positive effect on the decision to contact a physician and on the frequency of doctor visits of patients insured in the statutory health care system, whereas, fourth, physician density has no effect on privately insured patients' decisions to contact a physician but an even stronger positive effect on the frequency of doctor visits than the statutorily insured. These findings give indirect evidence for the hypothesis that physicians induce demand among privately insured patients but not among statutorily insured.
    Date: 2007–03–18
  2. By: Georges Dionne (HEC Montréal); Robert Gagné (IEA, HEC Montréal); Abdelhakim Nouira
    Abstract: Corporate finance theory predicts that firms’ characteristics affect agency costs and hence their efficiency. Cummins et al (2006) have proposed a cost function specification that measures separately insurer efficiency in handling risk pooling, risk management, and financial intermediation functions. We investigate the insurer characteristics that determine these efficiencies. Our empirical results show that mutuals outperform stock insurers in handling the three functions. Independent agents and high capitalization reduce the cost efficiency of risk pooling. Certain characteristics such as being a group of affiliated insurers, handling a higher volume of business in commercial lines, assuming more reinsurance, or investing a higher proportion of assets in bonds, do significantly increase insurers’ efficiency in risk management and financial intermediation.
    Keywords: Risk pooling, risk management, financial intermediation, property-liability insurance, efficiency, agency costs.
    JEL: D21 D23 G22
    Date: 2007–04
  3. By: Islam, Roumeen
    Abstract: This paper builds on recent work that shows how financial sector outcomes are affected by the provision of information by financial and other entities. In particular, it shows that an indicator of economic transparency is positively related to higher levels of private credit and a lower share of nonperforming loans even after accounting for factors commonly believed to influence financial sector development in cross-country empirical estimation. Timely access to economic data allows investors to make better decisions on investments and to better monitor banks ' financial health. Greater economic transparency raises accountability and lowers corruption in bank lending.
    Keywords: Banks & Banking Reform,Financial Intermediation,Economic Theory & Research,Insurance & Risk Mitigation,Investment and Investment Climate
    Date: 2007–06–01
  4. By: Kreider, Brent
    Abstract: Although validation data consistently reveal the presence of large degrees of reporting error in popular survey datasets, measurement issues are mostly ignored in empirical research. Recent evidence from Bound et al. (2001) and Black et al. (2003) suggests that reporting errors routinely violate all of the classical measurement error assumptions. This paper highlights the potential severity of the identification problem for regression coefficients given the presence of even infrequent arbitrary classification errors in a binary regressor. In an experimental setting, health insurance misclassification rates of less than 1.3 percent generate double-digit percentage point ranges of uncertainty about the variable's true marginal effect on the use of health services.
    Keywords: Nonclassical measurement error, health insurance, corrupt sampling, binary regressor, classification error
    Date: 2007–06–12

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