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on Insurance Economics |
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Issue of 2008‒05‒24
four papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Gabrielle Demange |
| Abstract: | This paper analyzes the efficient design of insurance schemes in the presence of aggregate shocks and moral hazard. The population is divided into groups, the labour force in different sectors for instance. In each group, individuals are ex ante identical but are subject to idiosyncratic shocks. Without moral hazard, optimality requires (1) full insurance against idiosyncratic shocks, which gives rise to a representative agent for each group and (2) optimal sharing of macro-economic risks between these representative agents. The paper investigates what remains of this analysis when the presence of moral hazard conflicts with the full insurance of idiosyncratic shocks. In particular, how is the sharing of macro-economic risks across groups affected by the partial insurance against idiosyncratic risks? The design of unemployment insurance schemes in different economic sectors, and the design of pension annuities in an unfunded social security system are two potential applications. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2008-27&r=ias |
| By: | Patricia Born; M. Martin Boyer |
| Abstract: | The liability crisis of the eighties led to the enactment of the federal Liability Risk Retention Act of 1986, which encouraged the formation of risk retention groups, a new organizational form that is incorporated under a federal charter. We use risk retention groups as a proxy for insurers opting for a federal charter and assess empirically the economic viability of an optional federal charter. Using annual data from the National Association of Insurance Commissioners, we assess whether risk retention groups increase insurance availability and competition in the medical malpractice insurance industry. We consider the insurers’ use of two different types of insurance contracts, namely occurrence contracts and claims-made and reported contracts, and evaluate the benefits to policyholders and society of insurers having access to an optional federal charter, while remaining under state regulatory and solvency controls. <P>La crise des assurances de la responsabilité civile qu’ont connue les États-Unis au milieu des années 80 a mené le gouvernement fédéral à légiférer pour augmenter le nombre d’assureurs au pays via le Liability Risk Retention Act de 1986. Cette loi a permis la création d’un nouveau type d’assureurs, les risk retention groups (RRG), qui sont régis par une charte quasi-fédérale contrairement aux assureurs traditionnels qui doivent obtenir un permis d’exploitation dans chaque état américain. Nous utilisons ces RRG dans notre étude pour évaluer la pertinence d’autoriser les assureurs américains d’être incorporés et réglementés par le gouvernement fédéral plutôt qu’au niveau des états individuellement. En utilisant des données de la National Association of Insurance Commissioners, nous examinons si la présence des RRG a augmenté la compétition et la disponibilité de produits d’assurance de la responsabilité civile des professionnels de la médecine. Nous évaluons ainsi les bénéfices pour les assurés et la société de permettre aux assureurs d’être réglementés et incorporés au niveau fédéral. |
| Keywords: | medical malpractice insurance, optional federal charter, insurance availability, claims-made contracts, assurance de la responsabilité civile, charte fédérale optionnelle, disponibilité des assurances, contrats CMR. |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2008s-14&r=ias |
| By: | Patricia Born; M. Martin Boyer |
| Abstract: | The liability crisis of the 1970s led to the introduction of a new type of insurance policy designed, according to Doherty (1991), to reduce the un-diversifiable uncertainty associated with writing long-tail liability lines. These new claims-made and reported policies gained favor in place of the traditional occurrence coverage in the early eighties not only in medical malpractice, but also in the general liability arena. Under occurrence coverage, a loss incurred in a given year is covered by the contract for that year, regardless of when the claim is reported. In contrast, a claims-made policy pays only the claims reported in the policy year. Our paper presents a structure, conduct, and performance analysis à la Joskow (1973) of the medical malpractice insurance industry by focusing on the differences between the two contracts. The main question we want to address is why there are two types of contracts that cover the same risk exposure in the medical malpractice insurance industry whereas in other lines of insurance, only one exists primarily. <P>La crise de la responsabilité civile des années 70 a mené à la création d’un nouveau type de contrat d’assurance qui avait pour but, selon Doherty (1991), de réduire le risque systématique associé aux polices d’assurance à longue durée. Ces contrats CMR (Claims-Made and Reported) ont obtenu la faveur du public dans les années 80 particulièrement pour ce qui est de l’assurance de la responsabilité civile des professionnels de la médecine. Nous présentons ainsi une étude de la structure et de la performance de l’industrie de l’assurance de la responsabilité civile des professionnels de la médecine en mettant en relief les deux types de contrats dans ce marché. La question à laquelle nous voudrions ultimement répondre est la suivante : pourquoi dans le marché de l’assurance de la responsabilité civile des professionnels de la médecine retrouvons-nous les deux types de contrats alors qu’un seul type est généralement offert dans les autres marchés? |
| Keywords: | medical malpractice insurance, industry structure and performance analysis, claims-made contracts, assurance de la responsabilité civile des professionnels de la médecine, analyse de la structure et de la performance de l’industrie, contrats CMR |
| Date: | 2008–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2008s-13&r=ias |
| By: | Renaud Bourlès (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Dominique Henriet (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579) |
| Abstract: | This paper examines the impact of risk heterogeneity and asymmetric information on mutual risk-sharing agreements. It displays the optimal incentive compatible sharing rule in a simple two-agent model with two levels of risk. When individual risk is public information, equal sharing of wealth is not achievable when risk heterogeneity is too large or when risk aversion is too low. However the mutualization principle still holds as agents only bear aggregate risk. This result no longer holds when risk is private information. Moreover, the asymmetry of information (i) makes equal sharing unsustainable when both individuals are low risk types (ii) induces some exchanges when agents have the same level of initial wealth and (iii) induces changes in the direction of transfer with respect to the complete information benchmark in some states of nature when risk types are independent and absolute risk aversion is decreasing and convex. |
| Keywords: | Mutual agreements; Asymmetric information; Mechanism Design |
| Date: | 2008–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00278178_v1&r=ias |