nep-ias New Economics Papers
on Insurance Economics
Issue of 2011‒07‒27
five papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. The Effects of Health Shocks on Employment and Health Insurance: The Role of Employer-Provided Health Insurance By Cathy J. Bradley; David Neumark; Meryl I. Motika
  2. Saving, Microinsurance: Why You Should Do Both or Nothing. A Behavioral Experiment on the Philippines By Landmann, Andreas; Vollan, Björn; Frölich, Markus
  3. Attitudes towards insurance: the role of propensity to hold liquid asset By Antonino Iero; Giorgio Tassinari
  4. Curb your premium! evaluating state intervention in medical malpractice insurance By Sofia, AmaralGarcia; Veronica, Grembi
  5. Impact of Health Insurance on Consumption and Saving Behaviours: Evidence from Rural China By Cheung, Diana; Padieu, Ysaline

  1. By: Cathy J. Bradley; David Neumark; Meryl I. Motika
    Abstract: We study how men’s dependence on their own employer for health insurance affects labor supply responses and loss of health insurance coverage when faced with a serious health shock. Men with employment-contingent health insurance (ECHI) are more likely to remain working following some kinds of adverse health shocks, and are more likely to lose insurance. With the passage of health care reform, the tendency of men with ECHI as opposed to other sources of insurance to remain employed following a health shock may be diminished, along with the likelihood of losing health insurance.
    JEL: I18 J22 J38
    Date: 2011–07
  2. By: Landmann, Andreas; Vollan, Björn; Frölich, Markus
    Abstract: This paper analyzes data from a novel field experiment designed to test the impact of two different insurance products and a secret saving device on solidarity in risk-sharing groups among rural villagers in the Philippines. Risk is simulated by a lottery, risk-sharing is possible in solidarity groups of three and insurance is introduced via less risky lotteries. Our main hypothesis is that formal market-based products lead to lower transfers among network members. We also test for the persistence of this crowding-out of solidarity. We find evidence for a reduction of solidarity by insurance if shocks are observable. Depending on insurance design, there is also evidence for persistence of this effect even if insurance is removed. Simulations using our regression results show that the benefits of insurance are completely offset by the reduction in transfers. However, if secret saving is possible solidarity is very low in general and there is no crowding out effect of insurance. This suggests that introducing formal insurance is not as effective as it is hoped for when the monetary situation can be closely monitored, but that it might be a very important complement when savings inhibit observing financial resources. --
    JEL: C93 O12 Z13
    Date: 2011
  3. By: Antonino Iero (Research Department, Unipol, Bologna); Giorgio Tassinari (Università di Bologna)
    Abstract: There’s a lack of research on the relationship between families’ attitudes toward insurance and their financial behavior. The Italian insurance market appears weak with regard to non life and non motor insurance: Italy ranks only 18th in Europe in terms of the ratio between non life and non motor premiums and GDP. The propensity to subscribe to an insurance contract appears largely to depend on geographical area, qualification and job activity. Regardless of their wealth, families subscribing to a non life and non motor insurance policy show a significantly lower propensity for financial liquidity. This relationship suggests an opportunity: selling insurance products to high liquidity families offers financial industry the possibility to sell them new financial assets too. There is a final benefit for Italian families, whose high liquidity indicates risk adversity while their propensity not to buy insurance exposes them to great real risks: buying more insurance products they will be less exposed to real risks and have a better return on their financial investments.
    Keywords: Insurance markets, Risk adversity, Italian families
    Date: 2011
  4. By: Sofia, AmaralGarcia; Veronica, Grembi
    Abstract: Using data of Italian public healthcare providers over years 2001 through 2008, we evaluate the impact of two policies adopted by Italian Regions (i.e., States) to cope with increasing medical malpractice costs using a Difference-in-Difference specification. We assess the impact of the policies on premiums paid and legal expenditures. The first policy consisted in collecting information and monitoring both compensation requests and any legal action related to a medical malpractice claim against a public healthcare provider. The second policy is a switch from private to public insurance for damages up to 500,000 euros combined with a centralized-regional contracting out in the private insurance market for damages in excess of 500,000 euros. Both policies represent attempts to cope with multiple agency problems within the public sector. Our results show that the impact of central monitoring in malpractice claims trend can reduce up to 29% the premiums paid for the treated providers, while the effect is obviously stronger for public insurance (41%). We control for the effects of the latter also on the trend of legal expenditures as proxy for common pool behaviors which do not result from our data. Validity tests show that our results are not driven by a decreasing trend affecting the insurance expenditures of the analyzed units before the policies’ introduction.
    Keywords: Medical Errors; Medical Malpractice Premium; Legal Expenditures; Difference in Difference.
    JEL: K32 G22 I18
    Date: 2011–07
  5. By: Cheung, Diana; Padieu, Ysaline
    Abstract: By reducing risk on income, health insurance may reduce household precautionary behaviours and boost consumption. This paper evaluates the impact of a subsidized public health insurance scheme designed for rural residents, the New Cooperative Medical Scheme (NCMS), on consumption and saving behaviours in rural China. To do so, we use socioeconomic and demographic data from the China Health and Nutrition Survey and implement OLS, IV and Propensity Score Matching. We find that NCMS helps lowering household savings by enhancing total consumption expenditures, in particular food consumption and bride expenses with OLS and IV estimations. However, when we implement a propensity score matching coupled with a difference-in-difference approach to control for time-invariant unobservables, these results no longer hold. Thus, the scheme does not have a disincentive effect on savings nor an incentive effect on consumption, suggesting that the implementation of the insurance is too recent in 2006 to be trusted by rural Chinese households, to reduce income risk and enable them to lower their precautionary savings. --
    Keywords: Rural China,New Cooperative Medical Scheme,Saving,Consumption Propensity Score Matching,Difference-in-Difference
    JEL: C21 D1 I18 O53
    Date: 2011

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