nep-ias New Economics Papers
on Insurance Economics
Issue of 2011‒09‒16
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Equilibrium and Strategic Communication in the Adverse Selection Insurance Model By Gerald D. Jaynes
  2. Health Insurance without Single Crossing: Why Healthy People have High Coverage By Boone, J.; Schottmuller, C.
  3. Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks By Erwann Michel-Kerjan; Paul Raschky; Howard Kunreuther
  4. Nonidentification of Insurance Models with Probability of Accidents By Gaurab Aryal; Isabelle Perrigne; Quang Vuong
  5. "Permanent and Selective Capital Account Management Regimes as an Alternative to Self-Insurance Strategies in Emerging-market Economies" By Jorg Bibow
  6. Does expanding health insurance beyond formal-sector workers encourage informality ? measuring the impact of Mexico's Seguro Popular By Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen

  1. By: Gerald D. Jaynes
    Date: 2011–09–03
  2. By: Boone, J.; Schottmuller, C. (Tilburg University, Center for Economic Research)
    Abstract: Standard insurance models predict that people with high (health) risks have high insurance coverage. It is empirically documented that people with high income have lower health risks and are better insured. We show that income differences between risk types lead to a violation of single crossing in the standard insurance model. If insurers have some market power, this can explain the empirically observed outcome. This observation has also policy implications: While risk adjustment is traditionally viewed as an intervention which increases efficiency and raises the utility of low health agents, we show that with a violation of single crossing a trade off between efficiency and solidarity emerges.
    Keywords: Health insurance;single crossing;risk adjustment.
    JEL: D82 I11
    Date: 2011
  3. By: Erwann Michel-Kerjan; Paul Raschky; Howard Kunreuther
    Abstract: Using a unique dataset of insurance decisions by over 1,800 large U.S. corporations, this study provides the first empirical analysis of firm behavior that compares corporate demand for property and catastrophe insurance (here, terrorism). We combine demand and supply data and apply a simultaneous-equation approach to address the problem of endogenous premium decisions. The main finding is that demand for property and catastrophe insurance are not very different and that the demand for catastrophe coverage is actually more price inelastic. We also show that a corporation’s ability to self-insure affects the demand for catastrophe insurance but not for property insurance.
    JEL: D21 D81 G22 H56
    Date: 2011–09
  4. By: Gaurab Aryal; Isabelle Perrigne; Quang Vuong
    Abstract: In contrast to Aryal, Perrigne and Vuong (2009), this note shows that in an insurance model with multidimensional screening when only information on whether the insuree has been involved in some accident is available, the joint distribution of risk and risk aversion is not identified.
    JEL: C14 L62 D82 D86
    Date: 2011–08
  5. By: Jorg Bibow
    Abstract: Currency market intervention-cum-reserve accumulation has emerged as the favored "self-insurance" strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed consideration, especially in the absence of fundamental reform of the global monetary and financial order. Mainstream arguments in favor of financial globalization are found unconvincing; any indirect benefits allegedly obtainable through hot money inflows are equally obtainable without actually tolerating such inflows. The paper investigates the experiences of Brazil, Russia, India, and China (the BRICs) in the global crisis and subsequent recovery, focusing on their respective policies regarding capital flows.
    Keywords: Capital Flows; Self-Insurance; Capital Controls; Financial Regulation
    JEL: F02 F32 F33 F39 G28 O23
    Date: 2011–09
  6. By: Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen
    Abstract: Seguro Popular was introduced in 2002 to provide health insurance to the 50 million Mexicans without Social Security. This paper tests whether the program has had unintended consequences, distorting workers'incentives to operate in the informal sector. The analysis examines the impact of Seguro Popular on disaggregated labor market decisions, taking into account that program coverage depends not only on the individual's employment status, but also that of other household members. The identification strategy relies on the variation in Seguro Popular's rollout across municipalities and time, with the difference-in-difference estimation controlling for household fixed effects. The paper finds that Seguro Popular lowers formality by 0.4-0.7 percentage points, with adjustments largely occurring within a few years of the program's introduction. Rather than encouraging exit from the formal sector, Seguro Popular is associated with a 3.1 percentage point reduction (a 20 percent decline) in the inflow of workers into formality. Income effects are also apparent, with significantly decreased flows out of unemployment and lower labor force participation. The impact is larger for those with less education, in larger households, and with someone else in the household guaranteeing Social Security coverage. However, workers pay for part of these benefits with lower wages in the informal sector.
    Keywords: Health Monitoring&Evaluation,Labor Markets,Labor Policies,Housing&Human Habitats,Population Policies
    Date: 2011–08–01

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