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on Insurance Economics |
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Issue of 2010‒01‒30
ten papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Gilbert M. Llanto; Joselito Almario; Marinella Gilda Llanto-Gamboa (Philippine Institute for Development Studies) |
| Abstract: | This study assesses the state of micro-insurance in the country, identifies the players and their performance, and the challenges facing micro-insurance development. The term “micro� pertains to the capacity of a program to handle the small, sometime irregular cash flows of poor households, who have been excluded in the commercial insurance system for a variety of reasons. Micro-insurance products, specifically designed with the poor in mind, will help mitigate risks and reduce the vulnerability of poor households. The most prominent forms of micro-insurance are life insurance and health insurance (carried out as part of an overall health care package that links the health insurance to a health facility), which have been designed to be responsive to the need of poor households. The paper reports 17 players in the emerging micro-insurance industry, consisting of 12 cooperatives, three NGOs/MFIs, and two transport associations that are offering “home-made� micro-insurance. These “home-made� microinsurance products continue to be provided despite their actuarial weaknesses and lack of financial capacity of the providers because of very strong demand from their membership for such financial products. Given their advantages over commercial insurance companies, the mutual benefit associations (MBAs) are the usual vehicles of micro-insurance programs. In 2004, 18 MBAs were registered with the Insurance Commission (IC) with accumulated assets of PhP14.8 billion. Members’ equity totaled PhP4.25 billion. The paper calls attention to the institutional, policy and regulatory issues and challenges facing micro-insurance. |
| Keywords: | micro-insurance, risk protection services, insurance industry, life insurance, mutual benefit associations, social protection, micro-finance institutions, micro-insurance delivery |
| JEL: | G21 G22 G20 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:1761&r=ias |
| By: | Gilberto M. Llanto; Maria Piedad Geron; Joselito Almario (Philippine Institute for Development Studies) |
| Abstract: | Low income households find it hard to cope with the risks brought about by an illness or injury, death of a family member, man-made calamities and natural disasters. Demand for microinsurance products is growing and both formal and informal microinsurance schemes have started to emerge to address this need. This paper seeks to provide a better understanding of the micro-insurance market in the Philippines and to draw certain principles for micro-insurance regulation from a review of the Philippine experience with micro-insurance. The Philippine experience on the provision of micro-insurance services and the interaction between the insurance providers and the regulator may help inform the development of certain principles for micro-insurance regulation. |
| Keywords: | Micro-insurance, regulatory framework, mutual benefit association, Insurance Commission, risk protection, partner agent approach |
| JEL: | G21 G22 G28 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:1765&r=ias |
| By: | Arvidsson, Sara (VTI) |
| Abstract: | By combining Contract Theory and vehicle positioning techniques, insurance companies can replace some of the proxies for risk by actual traffic behavior when pricing the premium. A mechanism design model is used to illustrate that Usage Based Insurance (UBI) can separate risks in terms of driving behavior. This makes it possible to reward safe driving habits since the pricing scheme better reflects the accident risk. The conclusion is that UBI provides an actuarially fair premium for the insuree. It is further an efficient instrument to separate risks for the insurer since it reduces the information asymmetries highlighted in this paper. |
| Keywords: | Usage based insurance; UBI; Pay as you drive; PAYD; Pay as you speed; PAYS; Insurance |
| JEL: | D82 D86 |
| Date: | 2010–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2010_002&r=ias |
| By: | Gilberto M. Llanto; Ma. Piedad S. Geron; Joselito S. Almario (Philippine Institute for Development Studies) |
| Abstract: | Illness or injury, death of a family member, man-made calamities and natural disasters have a devastating effect on those poor households’ cash flow, liquidity and earning capacities and thus, on household welfare. Demand for micro-insurance products is growing in view of continuing risks to household welfare and the seeming inability of the government to address this issue. This study seeks to provide a better understanding of the micro-insurance market in the Philippines and to draw certain principles for micro-insurance regulation from a review of the Philippine experience with micro-insurance. The study describes how policies, legal, regulatory and supervisory framework governing insurance have shaped the development of the market and vice versa. The Philippine experience on the provision of micro-insurance services and the interaction between the insurance providers and the regulator may help inform the development of certain principles for micro-insurance regulation. |
| Keywords: | micro-insurance, catastrophic events, moral hazard, market conduct regulation, product regulation |
| JEL: | G21 G22 G28 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:1767&r=ias |
| By: | Chia Ngee Choon; Shawna Lim Shi’en; Angelique Chan (Singapore Centre for Applied and Policy Economics) |
| Abstract: | Feminization of ageing leads to issues relating to long term healthcare financing since females are more susceptible to chronic illnesses. This paper assesses the current provision of long-term care (LTC) in Singapore by first examining the health status of elderly female; and then estimates the present value of LTC expenses. We calibrate the LTC costs for institutional nursing homes, community homes and informal home-based care with domestic helper. We next evaluate the comprehensiveness of a private disability insurance scheme in Singapore (Eldershield) in capturing the expected share of LTC expenditures. We compare the policy comprehensiveness of Eldershield payouts for different utilizations of LTC at different levels of means-tested government subsidies. With subsidies, the LTC cost can be adequately covered by Eldershield; without any subsidies, Eldershield is able to capture 25% to 40% of the LTC costs. We also evaluate the LTC financing implications after an osteoporotic hip fracture surgery. |
| Keywords: | health financing, long-term care, ageing, disability insurance, policy comprehensiveness |
| JEL: | H51 I11 J14 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:tradew:1658&r=ias |
| By: | Alex Arifianto; Ruly Marianti; Sri Budiyati; Ellen Tan (SMERU Research Institute) |
| Abstract: | Based on the notion that good health is one of the basic right of all citizens, the Government of Indonesia (GoI) has promoted programs on health care financing for the poor. One of these programs is the Jaminan Pemeliharaan Kesehatan (JPK). In 2003, the pilot project on JPK for the poor (JPK-Gakin) started in 15 districts and two provinces, and was expanded to additional regions the following year. Since April 1 2004, PT Askes, a profit oriented private insurance company, was assigned as the insurer of the nonprofit health insurance scheme for the poor (the JPK-Gakin) in district Tabanan. With respect to PT Askes it is important to see in what ways does the prominent role of PT Askes influence the dynamics of health service delivery and how different is PT Askes from other insurers (the non-profit - public institutions) in managing the JPK-Gakin scheme. The Tabanan case demonstrated that the supervision and monitoring by the Dinas Kesehatan (DinKes) of an insurer like Askes runs the risks of being less effective because PT Askes is a relatively well-established institution that is totally independent of the DinKes. Moreover, there is a difference in the level of expertise and experience between PT Askes and the Dinkes regarding the management of insurance schemes. Therefore, the supervision and monitoring of PT Askes by the DinKes tends to be “formal� instead of “actual.� This difference in the level of expertise and experience can also be a barrier for the DinKes to negotiate the cost and coverage of the scheme with PT Askes. PT Askes – as the insurer – is also barely involved in the promotion and socialization of the program and the identification of the poor as their potential clients. Obviously, the JPK-Gakin scheme can secure primary health care for the poor (the gakin) at the puskesmas, but this does not necessarily mean that the poor will receive good quality care. In general, the health care at the puskesmas is quite limited both in term of quality and variety. The implementation of the JPK-Gakin scheme –including adequate capitation for the puskesmas from this scheme– would certainly not change this condition easily as it relates to more complex factors such as the availability of good medical staffs, instruments and facilities. The most positive effect of the JPK-Gakin scheme on the provision of health care for the poor is the possibility to get secondary and tertiary health care that is usually unaffordable for the poor. Nevertheless, for a range of different reasons, the majority of Gakin patients are not referred to the hospital. There are cases where the poor refused to be referred to the hospital although it was necessary because they were insecure about the additional costs that were not covered by PT Askes. Thus, although the JPK-Gakin scheme does secure the right of the poor to get medical treatment at the hospital, it cannot secure the actualization of it. |
| Keywords: | health care program, financing mechanism, insurance scheme, stakeholders,; health services |
| JEL: | I20 I18 G22 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:1611&r=ias |
| By: | Zafar Nazarov |
| Abstract: | This study estimates the effect of the UI (Unemployment Insurance) wage replacement rate on reemployment wages using the sample of men in the 1996 and 2001 Surveys of Income and Program Participation. It models employment search behavior in a dynamic discrete time hazard setting with three possible outcomes: finding a full-time job, finding a part-time job, or staying unemployed (continuing the job search). It finds that reemployment wages, particularly part-time wages, decrease with the UI wage replacement rate. Furthermore, the wage replacement rate depresses the prospect of finding full-time work while increasing the prospect of finding part-time work. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:734&r=ias |
| By: | David Card (UC Berkeley and NBER); David S. Lee (Princeton University and NBER); Zhuan Pei (Princeton University) |
| Abstract: | We consider nonparametic identification of the average marginal effect of a continuous endogenous regressor in a generalized nonseparable model when the regressor of interest is a known, deterministic, but kiniked function of an observed continuous assignment variable. This design arises in many institutional settings where a policy variable of interest (such as weekly unemployment benefits) is mechanically related to an observed but potentially endogenous variable (like previous earnings). We characterize a broad class of models in which a "Regression Kink Design" (RKD) provides valid inferences for the underlying marginal effects. Importantly, this class includes cases where the assignment variable is endogenously chose. Under suitable conditions we show that the RKD estimand identifies the "treatment on the treated" parameter (Florens et al., 2009) or the "local average response" (altonji and Matzkin, 2005) that is identified in an ideal randomized experiment. As in a regression discontinuity design, the required indentification assumption implies strong and readilt testable predictions for the pattern of predetermined covariates around the kink point. Standard local linear regression techniques can be easily adapted to obtain "nonparametris" RKD estimates. We illustrate the RKD approach by examining the effect of unemployment insurance benefits on the duration of benefit claims, using rich microdata from the state of Washington. |
| Keywords: | Unemployment benefits, Washington State, unemployment insurance, regression kink design |
| JEL: | D50 C01 E24 J08 J64 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1206&r=ias |
| By: | Jovi C. Dacanay; Maria Cherry Lyn S. Rodolfo (Philippine Institute for Development Studies) |
| Abstract: | There is a growing emphasis on the role of trade in health services (telehealth, health tourism and retirement, investments and deployment of medical professionals) in easing fiscal constraints, generating jobs and income, improving infrastructure and financing, and upgrading the capacities of health professionals. This paper seeks to identify the opportunities, barriers, and risks for the Philippines in participating in global trade in health services. It examines the country’s capabilities in engaging in trade and identifies strategic directions that the Philippines can pursue. It also presents the different market niches that can be tapped relative to the opportunities, namely- the aging populations of the Organisation for Economic Co-operation and Development (OECD) nations; the shortage of medical professionals in those countries; the long waiting lines in hospital facilities; the Health Insurance Portability and Accountability Act of the United States; and the poor healthcare systems in other countries. It also addresses the weaknesses in the supply capabilities of the country�the lack of a policy framework to develop the healthcare services sector in a globalized environment, the lack of human resources planning, and the lack of alignment in the initiatives of the government and private sector. |
| Keywords: | trade, health services, Insurance, Philippines |
| JEL: | I10 I18 L89 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:tradew:1740&r=ias |
| By: | Alejandro Balbás; Beatriz Balbás; Antonio Heras |
| Abstract: | The optimal reinsurance problem is a classic topic in Actuarial Mathematics. Recent approaches consider a coherent or expectation bounded risk measure and minimize the global risk of the ceding company under adequate constraints. However, there is no consensus about the risk measure that the insurer must use, since every risk measure presents advantages and shortcomings when compared with others. This paper deals with a discrete probability space and analyzes the stability of the optimal reinsurance with respect to the risk measure that the insurer uses. We will demonstrate that there is a “stable optimal retention” that will show no sensitivity, insofar as it will solve the optimal reinsurance problem for many risk measures, thus providing a very robust reinsurance plan. This stable optimal retention is a stop-loss contract, and it is easy to compute in practice. A fast algorithm will be given and a numerical example presented. |
| Keywords: | Optimal reinsurance, Risk measure, Sensitivity, Stable optimal retention, Stop-loss reinsurance |
| JEL: | G22 G11 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb100201&r=ias |