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on Insurance Economics |
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Issue of 2010‒08‒06
seven papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Lammers, Frauke; Schiller, Jörg |
| Abstract: | This paper investigates the impact of insurance contract design on the behavior of filing fraudulent claims in an experimental setup. We test how fraud behavior varies for insurance contracts with full coverage, a straight deductible or variable premiums (bonus-malus contract). In our experiment, filing fraudulent claims is a dominant strategy for selfish participants, with no psychological costs of committing fraud. While some people always commit fraud, a substantial share of people only occasionally or never defraud. In addition, we find that deductible contracts may be perceived as unfair and thus increase the extent of claim build-up compared to full coverage contracts. In contrast, bonus-malus contracts with variable insurance premiums significantly reduce the filing of fictitious claims compared to both full coverage and deductible contracts. This reduction cannot be explained by monetary incentives. Our results indicate that contract design significantly affects psychological costs and, consequently, the extent of fraudulent behavior of policyholders. -- |
| Keywords: | Insurance fraud,experiment,fairness,contract design,deductible,bonus-malus |
| JEL: | G22 C91 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:192010&r=ias |
| By: | Cordella, Tito; Yeyati, Eduardo Levy |
| Abstract: | Why should countries buy expensive catastrophe insurance? Abstracting from risk aversion or hedging motives, this paper shows that catastrophe insurance may have a catalytic role on external finance. Such effect is particularly strong in those middle-income countries that face financial constraints when hit by a shock or in its anticipation. Insurance makes defaults less appealing, relaxes countries'borrowing constraint, increases their creditworthiness, and enhances their access to capital markets. Catastrophe lending facilities providing"cheap"reconstruction funds in the aftermath of a natural disaster weaken but do not eliminate the demand for insurance. |
| Keywords: | Debt Markets,Bankruptcy and Resolution of Financial Distress,Labor Policies,Emerging Markets,Financial Intermediation |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5377&r=ias |
| By: | Randall S. Jones |
| Abstract: | Korea’s health-care system has contributed to the marked improvement in health conditions, while limiting spending to one of the lowest levels in the OECD through high patient co-payments and limited coverage of public health insurance. However, spending is now increasing at the fastest rate in the OECD. With continued upward pressure, not least from rapid population ageing, it is essential to boost efficiency by reforming the payment system, reducing drug expenditures, shifting long-term care out of hospitals, promoting healthy ageing and introducing gatekeepers. As the heavy reliance on social insurance payments for health will be an increasing drag on employment as the population ages, it is necessary to raise the share of tax-based financing in conjunction with effective measures to keep spending in check. Measures to ensure adequate access for low-income households are a priority given the high out-of-pocket payments. Quality should be improved by enhancing transparency, promoting restructuring in the hospital sector and expanding the number of doctors.<P>La réforme des soins de santé en Corée<BR>Le système de santé coréen a contribué à la nette amélioration de l’état de santé de la population, tout en limitant les dépenses à un niveau qui compte parmi les plus faibles de la zone de l’OCDE, les deux facteurs qui ont joué à cet égard étant la forte participation financière du patient et la couverture limitée de l’assurance-maladie publique. Néanmoins, les dépenses augmentent actuellement au rythme le plus rapide de la zone de l’OCDE. La tendance à la hausse étant appelée à se poursuivre, en particulier à cause du vieillissement rapide de la population, il est indispensable d’accroître l’efficience en réformant le système de paiement, en réduisant les dépenses pharmaceutiques, en ne confiant plus aux hôpitaux les soins de longue durée, en favorisant le vieillissement en bonne santé et en mettant en place un filtrage pour l’accès aux soins. Puisque, du fait du vieillissement de la population, le poids accordé aux paiements d’assurances sociales pour le financement du système de santé constituera de plus en plus un frein pour l’emploi, il est important d’accroître la part du financement de source fiscale. Il faut prioritairement assurer un accès correct des ménages à bas revenu, étant donné le niveau élevé des versements directs. Il faudrait améliorer la qualité des soins en instaurant plus de transparence, en favorisant la restructuration du secteur hospitalier et en augmentant les effectifs de médecins. |
| Keywords: | long-term care, diagnosis related groups, generic drugs, healthy ageing, medical expenditures, National Health Insurance, Korean health care, private health insurance, hospitals, financing health care, Separation Reform, Integration Reform, pharmaceutical drugs, co-payments, physicians, soins de longue durée, produits pharmaceutiques, vieillissement en bonne santé, dépenses médicales, assurance santé nationale, médicaments génériques, médecins, système de santé en Corée, assurance maladie privée, hôpitaux, groupe homogène de malades, financement des soins de santé, réforme de séparation, réforme d’intégration, part des dépenses de santé à la charge des assurés |
| JEL: | I1 |
| Date: | 2010–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:797-en&r=ias |
| By: | Schiller, Jörg |
| Abstract: | Die Entlohnung und Regulierung unabhängiger Versicherungsvermittler, wird aktuell vor allem vor dem Hintergrund der Bedeutung und Zukunft der Honorarberatung und -vermittlung intensiv diskutiert. Im Rahmen des vorliegenden Beitrags werden zunächst wichtige ökonomische Erkenntnisse zur Vertriebswegewahl von Versicherungsunternehmen dargestellt. Aufbauend auf zentrale betriebs- und gesamtwirtschaftliche Funktionen unabhängiger Versicherungsvermittler wird untersucht, wie durch unterschiedliche Entlohnungsformen Vermittlern effiziente Anreize gesetzt werden können. In diesem Zusammenhang wird auch der Frage nachgegangen, ob und inwieweit Regulierungsmaßnahmen, wie zum Beispiel ein generelles Verbot oder die Offenlegung von Provisionszahlungen sowie das sogenannte 'Provisionsabgabeverbot', notwendig und geeignet sind, die Effizienz von Versicherungsmärkten zu erhöhen. -- The compensation and regulation of independent intermediaries is an important issue in insurance markets. With this respect, the profitability and importance of fee-for-service and commission compensation of intermediaries is lively discussed in academia and in the insurance industry. This paper summarizes economic rationales why and in which lines of business insurance companies sell their products via independent intermediaries. With this respect, it is analyzed how different forms of compensation affect important market functions of independent intermediaries. Finally, the economic impact of certain regulatory interventions, like a mandatory disclosure or a general ban of any commissions and the German ban for intermediaries to share commission with policyholders, on market efficiency is discussed. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:182010&r=ias |
| By: | Zongxia Liang Bin Sun |
| Abstract: | This paper considers an optimal control of a large company with debt liability under bankrupt probability constraints. The company, which faces constant liability payments and has choices to choose various production/business policies from an available set of control policies with different expected profits and risks, controls the business policy and dividend payout process to maximize the expected present value of the dividends until the time of bankruptcy. However, if the dividend payout barrier is too low to be acceptable, it may result in the company's bankruptcy soon. In order to protect the shareholders' profits, the managements of the company impose a reasonable and normal constraint on their dividend strategy, that is, the bankrupt probability associated with the optimal dividend payout barrier should be smaller than a given risk level within a fixed time horizon. This paper aims at working out the optimal retention ratio, dividend payout level, explicit value function of the insurance company under bankrupt probability constraint by stochastic analysis, PDE methods and variational inequality approach, getting a risk-based capital standard to ensure the capital requirement of can cover the total given risk by numerical analysis, and giving reasonable economic interpretation for the results. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1007.5376&r=ias |
| By: | Lagarde, Olivier de |
| Abstract: | L'Union européenne refonde entièrement le dispositif de contrôle prudentiel des organismes d'assurance dans le cadre de la Directive Solvabilité II. En cours de mise en place, la Directive, qui peut être comparée à la norme prudentielle bancaire Bâle II, a surtout été analysée sous l'angle des techniques actuarielles. Mais la réforme soulève aussi des enjeux sociopolitiques importants. En instituant un nouveau contrôle sectoriel des risques, les assureurs – véritables inventeurs du dispositif – démontrent la portée politique de la théorie de l'auditabilité formulée par Power. En effet, les institutions d'assurance qui ont codéfini les normes de sécurité auxquelles elles vont être soumises, attachent davantage d'importance à la promotion de leur conformité aux nouvelles règles prudentielles qu'à l'efficience du dispositif mis en œuvre. Les conséquences potentielles sur le secteur sont pourtant lourdes. L'assurance encourt en effet le risque d'une financiarisation complète, au détriment de sa mission spécifique de protection. Elle pourrait aussi saisir cette opportunité pour réinventer sa diversité. Le contexte de la crise économique, qui a conduit les gouvernants à s'intéresser aux dispositifs de régulation, souligne le paradoxe foucaldien de la surveillance prudentielle de l'assurance : il s'agit de sécuriser une technologie de sécurité. Dans le cadre de la postmodernité financière, le contrôle des risques se politise et vient jouer le rôle du restaurateur de confiance afin de sauver le modèle libéral de ses propres turpitudes. |
| Keywords: | prudential supervision; risk control; risk society; auditability; regulation; Solvency II; insurance; contrôle prudentiel; contrôle des risques; société du risque; auditabilité; régulation; assurance; Solvabilité II; |
| JEL: | G28 G24 G22 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/4673&r=ias |
| By: | Tausch, Franziska (Maastricht University); Potters, Jan (Tilburg University); Riedl, Arno (Maastricht University) |
| Abstract: | Redistribution is an inevitable feature of collective pension schemes and economic experiments have revealed that most people have a preference for redistribution that is not merely inspired by self-interest. Interestingly, little is known on how these preferences interact with preferences for different pension schemes. In this paper we review the experimental evidence on preferences for redistribution and suggest some links to redistribution through pensions. For that purpose we distinguish between three types of situations. The first deals with distributional preferences behind a veil of ignorance. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved? |
| Keywords: | redistribution, fairness, pension, insurance, experiment |
| JEL: | C90 D01 D63 D64 H55 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5090&r=ias |