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on Insurance Economics |
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Issue of 2011‒07‒13
ten papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Francesca Barigozzi (UNIBO - Università di Bologna - Università degli studi di Bologna); 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 (EHESS) - 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 (EHESS) - CNRS : UMR6579); Giuseppe Pignataro (Department of Economics - University of Bologna) |
| Abstract: | We analyze mutual insurance arrangements (policies based on risk-sharing among a pool of policyholders) when consumers choose a self-insurance effort, that is an effort decreasing the size of any loss occurring. We consider both cooperative and non-cooperative strategies in the effort choice. Cooperation among policyholders leads to the full internalization of the positive impact the effort exerts on the premium. We show that, for an infinite size of pool, with cooperation first-best efficiency is achieved. Moreover, cooperation is sustained as an equilibrium in a repeated interaction game for a sufficiently low size of pool. An interesting implication of our results is that a cooperative mutual policy can dominate a stock insurance contract. Simulations show that mutual insurance with cooperation as an equilibrium dominates a second-best stock-type insurance policy even when pool size is low. |
| Keywords: | Mutual arrangement; self-insurance; positive externality on the insurance premium; cooperation |
| Date: | 2011–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00605267&r=ias |
| By: | Cardone Riportella, Clara |
| Abstract: | The purpose of this paper is to discuss and analyse the different aspects of the deposit insurance schemes in the EU and their harmonisation and compatibility with other Community regulations at the light of the start up of the third stage of the European Monetary System (EMS). |
| Keywords: | Supervision; Deposit insurance; Efficient financial markets; Financial harmonisation in the EU; Competitive restrictions; |
| URL: | http://d.repec.org/n?u=RePEc:ner:carlos:info:hdl:10016/7063&r=ias |
| By: | F. Barigozzi; R. Bourles; D. Henriet; G. Pignataro |
| Abstract: | We analyze mutual insurance arrangements (policies based on risk-sharing among a pool of policyholders) when consumers choose a self-insurance effort, that is an effort decreasing the size of the loss when the latter occurs. We both consider cooperative and non-cooperative strategies in the effort choice. Cooperation among policyholders leads to the full internalization of the positive impact the effort exerts on the premium. We show that, for an infinite size of the pool, with cooperation first-best efficiency is achieved. Moreover, cooperation is sustained as an equilibrium in a repeated interaction game for a sufficiently low size of the pool. An interesting implication of our results is that a cooperative mutual policy can dominate a stock insurance contract. Simulations show that mutual insurance with cooperation as an equilibrium dominates a second-best stock-type insurance policy for low value of the pool size. |
| JEL: | D82 I11 I18 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp765&r=ias |
| By: | Md Sahanur Islam (Assistant Professor, Meghnad Saha Institute of Technology, Nazirabad, p.o- Utchepota, Kolkata, India) |
| Abstract: | Quality of work life (QWL) is one of the major parts for the employees’ motivation in organizations. People can deliver their best potential if the QWL is improved and satisfactory. Researcher has seen many organizations have poor QWL and they are not aware of the conditions. Growth of Insurance sector is expected to be US$ 350-400 by 2020 and it is also expected that Indian Insurance market will reach the top 3 insurance market in the world. To achieve those insurance companies must have to reduce the attrition rate, which is very high in present conditions. Many insurance companies have taken various steps to prevent that, but researcher thought that quality of work life may be one of the reasons for the attrition. This paper aims to develop a model on the various factors affecting the attrition in insurance industry in India to overpower the drawbacks to achieve the desired objective |
| Keywords: | Quality of work life, Insurance sector, attrition rate, motivation, best potential |
| JEL: | M00 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cms:1icm11:2011-027_220&r=ias |
| By: | Bijlsma, Michiel; Boone, Jan; Zwart, Gijsbert |
| Abstract: | We study optimal risk adjustment in imperfectly competitive health insurance markets when high-risk consumers are less likely to switch insurer than low-risk consumers. First, we find that insurers still have an incentive to select even if risk adjustment perfectly corrects for cost differences among consumers. Consequently, the outcome is not efficient even if cost differences are fully compensated. To achieve first best, risk adjustment should overcompensate for serving high-risk agents to take into account the difference in mark-ups among the two types. Second, the difference in switching behavior creates a trade off between efficiency and consumer welfare. Reducing the difference in risk adjustment subsidies to high and low types increases consumer welfare by leveraging competition from the elastic low-risk market to the less elastic high-risk market. Finally, mandatory pooling can increase consumer surplus even further, at the cost of efficiency. |
| Keywords: | health insurance; imperfect competition; leverage; risk adjustment |
| JEL: | G22 I11 I18 L13 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8461&r=ias |
| By: | Amy Finkelstein; Sarah Taubman; Bill Wright; Mira Bernstein; Jonathan Gruber; Joseph P. Newhouse; Heidi Allen; Katherine Baicker; The Oregon Health Study Group |
| Abstract: | In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides a unique opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group. |
| JEL: | H51 H75 I1 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17190&r=ias |
| By: | Kory Kroft; Matthew J. Notowidigdo |
| Abstract: | We study how the level of unemployment insurance (UI) benefits that trades off the consumption smoothing benefit with the moral hazard cost of distorting job search behavior varies over the business cycle. Empirically, we find that the moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests that the consumption smoothing benefit of UI is acyclical. Using these estimates to calibrate our model, we find that a one standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the welfare-maximizing wage replacement rate. |
| JEL: | H5 J64 J65 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17173&r=ias |
| By: | Euwals, Rob (CPB Netherlands Bureau for Economic Policy Analysis); van Vuren, Annemiek (CPB Netherlands Bureau for Economic Policy Analysis); van Vuuren, Daniel (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | Early retirement schemes and disability insurance in the Netherlands have both been reformed during the past decades. The reforms have increased incentives to continue working and have decreased the substitution between early retirement and disability. This study investigates the impact of the reforms on labour market exit probabilities. We use administrative data for workers in the Dutch health care sector between 1999 and 2006. We estimate a multinomial Logit model for transitions out of the labour force. The empirical results suggest that the reforms have been effective, as the labour market participation rate of the elderly has increased. The concept of substitute pathways into retirement seems less relevant today as the results confirm that disability insurance is closed off as an early retirement exit route. |
| Keywords: | early retirement, disability insurance, labour supply |
| JEL: | C35 J26 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5810&r=ias |
| By: | Samartín, Margarita; Cardone Riportella, Clara; Bustamante, Rodrigo |
| Abstract: | Theoretical banking literature has largely explored the role of financial intermediaries in the economy, market failures (banking panics) in the banking sector and the need for bank regulation. However, most models of banking panics and regulation have not been empirically tested. The Argentine 2001 crisis, with a large deposit withdrawal and the regulation introduced (suspension of convertibility) constitutes a scenario in order to apply some of the theoretical predictions. In particular, the paper applies Samartín [Samartín, M. (2002). Suspension of convertibility vesus deposit insurance: A welfare comparison. European Finance Review, 6(2), 223–244] to the particular case of Argentina. After the estimation of the most important parameters, the model predicts that suspension of convertibility seems to have been the most efficient intervention measure to stop the massive deposit withdrawals. |
| Keywords: | Argentina; Banking panics; Deposit insurance; Suspension of convertibility; |
| JEL: | G21 G28 |
| URL: | http://d.repec.org/n?u=RePEc:ner:carlos:info:hdl:10016/7175&r=ias |
| By: | Alexandre Boumezoued (R&D, Milliman, Paris - Milliman); Yoboua Angoua (R&D, Milliman, Paris - Milliman); Laurent Devineau (R&D Milliman - Milliman, SAF - Laboratoire de Sciences Actuarielle et Financière - Université Claude Bernard - Lyon I : EA2429); Jean-Philippe Boisseau (R&D, Milliman, Paris - Milliman) |
| Abstract: | In this paper, we detail the main simulation methods used in practice to measure one‐year reserve risk, and describe the bootstrap method providing an empirical distribution of the Claims Development Result (CDR) whose variance is identical to the closed‐form expression of the prediction error proposed by Wüthrich et al. (2008). In particular, we integrate the stochastic modeling of a tail factor in the bootstrap procedure. We demonstrate the equivalence with existing analytical results and develop closed‐form expressions for the error of prediction including a tail factor. A numerical example is given at the end of this study. |
| Keywords: | Non‐life insurance, Reserve risk, Claims Development Result, Bootstrap method, Tail factor, Prediction error, Solvency II |
| Date: | 2011–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00605329&r=ias |