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on Insurance Economics |
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Issue of 2013‒02‒16
eleven papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Falconer, Lawrence L.; Richardson, James W. |
| Abstract: | This paper reports SERF analysis to help rice landlords in the Upper Coastal Bend of Texas evaluate alternative crop insurance combinations of yield loss and prevented planting coverage levels given uncertainty related to surface irrigation water curtailment. For baseline and high curtailment probability scenarios, prevented planting buy up is preferred. |
| Keywords: | irrigation curtailment, rice production, crop insurance, Production Economics, Risk and Uncertainty, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:142990&r=ias |
| By: | Elisa Cavatorta (Centre for Development, Environment and Policy, SOAS, University of London, UK); Luca Pieroni (Department of Economics, University of Perugia, Italy) |
| Abstract: | This paper explores behavioural changes resulting from the presence of a background risk. Due to markets incompleteness, not all risks are insurable. The literature suggests that, according to the structure of preferences, agents bearing a background uninsurable risk are less willing to bear other insurable risks and increase their demand for insurance. The empirical evidence of this effect is limited and, despite the relevance of this question, unexplored in developing countries. This paper fills this gap. It explores the effect of a background risk on the decision to buy health insurance using household data from the Palestinian Territories. We consider the risk of food insecurity as a background uninsurable risk. Using a bivariate probit model, we find that the propensity to buy health insurance is positively affected by the presence of a background risk of food insecurity. When allowing the background risk to vary in intensity, we find that the propensity to insure is higher as the background risk becomes more intense. These results are robust to alternative indicators of background risk. The study shows that, in presence of background risks, there might be incentive changes towards the desirability of insurance that have implications for policy design. |
| Keywords: | Background Risk, Food Insecurity, Health Insurance, Bivariate Probit |
| JEL: | I11 O15 C35 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:06_13&r=ias |
| By: | Jean Philippe Platteau (University of Namur); Darwin Ugarte Ontiveros (University of Namur) |
| Abstract: | This paper is an attempt to understand the factors underlying the low take up and contract renewal rates frequently observed in insurance programs in poor countries. This is done on the basis of the experience of a microinsurance health program in India. We show that deficient information about the insurance product and the functioning of the scheme, poor understanding of the insurance concept, and the resulting low use of the insurance products by eligible households are the major causes of the low contract renewal rate among the households which has previously enrolled into the program. A particularly interesting finding is that, when a household has received a negative payout during the preceding year (the cost of the premium has exceeded the insurance benefits), it is more inclined to renew its participation if it has a better understanding of what insurance exactly means (a redistribution between lucky and unlucky individuals). Such a finding strongly suggests that the understanding failure is a key problem in attempts to provide insurance to poor people, and this problem is obviously more difficult to overcome than the largely supply-driven information failure. That economists have neglected the role of the understanding failure is apparent from the lack of attention to this aspect in recent theories aimed at improving our knowledge of human behavior toward risk. Another central, policy-relevant finding of the study is that participation in previously constituted self-help groups has the effect of enhancing both the insurance take up and contract renewal rates. This points to the essential role of non-governmental organizations that operate at the grassroots level. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nam:wpaper:1301&r=ias |
| By: | Tran, Trang; Coble, Keith H.; Harri, Ardian; Barnett, Barry J.; Riley, John Michael |
| Abstract: | Revenue insurance with shallow loss protection for farmers has been introduced recently. A common attribute of most shallow loss proposals is that they would be area-revenue triggered. The impact on optimal hedge ratios of combining these shallow loss insurance proposals with deep loss farm-level insurance is examined. Since crop insurance, commodity programs and forward pricing are commonly used concurrently to manage crop revenue risk, the optimal combinations of these tools are explored. Numerical analysis in the presence of yield, basis and futures price variability is used to find the futures hedge ratio which maximizes the certainty equivalent of a risk averse producer. The results generally reveal a lower optimal hedge ratio with area-insurance than with individual insurance and show that STAX and ARC tend to slightly increase optimal hedge ratios. |
| Keywords: | crop insurance, simulation, hedging, Agricultural Finance, Farm Management, Risk and Uncertainty, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:143050&r=ias |
| By: | Karov, Vuko; Wailes, Eric J.; Watkins, K. Bradley |
| Abstract: | Participation rates by southern irrigated crop producers in most important crop insurance programs have been relatively low. This paper empirically examines why this may be the case in Arkansas, and proposes a novel “gross margin” product specifically targeted at meeting the needs of these farmers. |
| Keywords: | crop insurance, Arkansas, irrigated crops, Agricultural and Food Policy, Risk and Uncertainty, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:142969&r=ias |
| By: | Awondo, Sebastain N.; Datta, Gauri S.; Ramirez, Octavio A.; Fonsah, Esendugue Greg |
| Abstract: | The magnitude of basis risk between Actual Production History (APH) and Group Risk Plan (GRP) contracts across corn farms in Illinois counties is estimated using pseudo-simulated yields with farm specific geospatial climate data. A two-step hierarchical Bayes small area estimator was used to address problems related to lack of representative sample, aggrega- tion bias, properly accounting for spatial and temporal heterogeneity and uncertainty in parameter estimates. We found wide variation in expected basis risk across farms within and between counties. Expected basis risk was found to sharply increase under APH plans with higher coverage levels. |
| Keywords: | Crop Insurance, Basis risk, Small area estimation, Hierarchical Bayes, Agricultural Finance, Research Methods/ Statistical Methods, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:143109&r=ias |
| By: | Atreya, Ajita; Ferreira, Susana |
| Abstract: | The NFIP has been a subject of tremendous interest since 2005 when it was flooded with claims from hurricanes Katrina and Rita, and was eventually drowned in debt. This paper focuses on the state of Georgia that has been neglected in terms of enforcing NFIP policies. We estimate a fixed effect model pooling the data from 1978-2010 across 153 counties in Georgia to determine the determinants that influence the decision to buy flood insurance. The empirical analysis supports the hypothesis that income and price significantly influences the decision to buy the flood insurance. Our empirical findings also suggest that recent flood event and the proportion of county in the floodplain has a significant positive impact on decision to buy flood insurance. Education level and age seemed to have a significant impact on one’s decision to buy flood insurance; however, race did not have a significant impact. |
| Keywords: | NFIP, Flood Insurance, Fixed Effect Model, Environmental Economics and Policy, |
| Date: | 2013–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea13:143046&r=ias |
| By: | Wulfgramm, Melike (University of Bremen); Fervers, Lukas (University of Bremen) |
| Abstract: | This paper analyses the effect of unemployment insurance generosity and active labour market policy on reemployment stability in Europe. Using EU‐SILC and OECD data, we conduct discrete time survival analyses with shared frailty specification to identify policy effects at the micro and macro level. Empirical evidence suggests that unemployment benefit receipt is associated with longer reemployment duration at the individual level. Furthermore, countries with more generous unemployment insurance and higher ALMP spending show a more sustainable reintegration record of previously unemployed workers. These results point to a policy trade‐off between the well‐confirmed disincentive and locking‐in effect of unemployment benefits and ALMP programmes on the one hand, and their positive effect on reemployment stability on the other hand. |
| Keywords: | reemployment duration, job match quality, post‐unemployment employment stability, active labour market policy, unemployment benefits |
| JEL: | J64 J65 J68 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7193&r=ias |
| By: | Sumner La Croix (University of Hawaii Economic Research Organization Department of Economics); Lauren Gabriel (William S. Richardson School of Law, University of Hawai`i–Mānoa) |
| Abstract: | This report provides quantitative and qualitative measures of the impact of same-sex marriage on Hawai`i’s economy and government. We find that marriage equality is likely to lead to substantial increases in visitor arrivals, visitor spending, and state and county general excise tax revenues. We estimate that fewer than 100 spouses will be added as beneficiaries to public and private employer-provided health insurance plans. The size of the gains from marriage equality depends critically on upcoming rulings by the U.S. Supreme Court on the constitutionality of California’s Proposition 8 and the Defense of Marriage Act. |
| Keywords: | same-sex, marriage, health insurance, tourism, Hawaii |
| JEL: | J12 K36 I18 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201302&r=ias |
| By: | Sumner La Croix (UHERO, University of Hawaii at Manoa); Lauren Gabriel (William S. Richardson School of Law, University of Hawai`iÐManoa) |
| Abstract: | This report provides quantitative and qualitative measures of the impact of same-sex marriage on Hawai`iÕs economy and government. We find that marriage equality is likely to lead to substantial increases in visitor arrivals, visitor spending, and state and county general excise tax revenues. We estimate that fewer than 100 spouses will be added as beneficiaries to public and private employer-provided health insurance plans. The size of the gains from marriage equality depends critically on upcoming rulings by the U.S. Supreme Court on the constitutionality of CaliforniaÕs Proposition 8 and the Defense of Marriage Act. |
| Keywords: | same-sex, marriage, health insurance, tourism, Hawaii |
| JEL: | J12 K36 I18 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2013-1&r=ias |
| By: | Erik Schut; Stéphane Sorbe; Jens Høj |
| Abstract: | The Netherlands, as other OECD countries, faces the challenge of providing high quality health and long-term care services to an ageing population in a cost-efficient manner. In the health care sector, reforms have aimed at introducing more competition. Despite major changes and some positive effects, the reforms run the risk of getting stuck in the middle between a centralised system of state-controlled supply and prices and a decentralised system based on regulated competition, providing insufficient incentives for provision of quality services and expenditure control. The main challenges are to complete the transition to regulated competition in health care provision, to strengthen the role of health insurers as purchasing agents and to secure cost containment in an increasingly demand-driven health care sector. In 2012, reforms expanded the role of the market in the hospital sector and reinforced budget controls. Both measures are not consistent and may jeopardize both objectives. More competitive markets require, at least, provision of good quality information, appropriate financing and better efficiency incentives. In view of population ageing, current policies mean that the cost of long-term care is set to more than double over the coming decades. Insufficient incentives for cost-efficient purchasing of long-term care should be addressed. However, the government?s plan to transfer long-term care purchasing to health insurers is unpromising unless additional measures ensure that insurers bear the associated financial risks. In addition, home care should be further encouraged at the expense of institutional care, while screening and targeting should be improved. This Working Paper relates to the 2012 OECD Economic Survey of the Netherlands (www.oecd.org/eco/surveys/Netherlands.<P>Réforme des soins de santé et soins de longue durée aux Pays-Bas<BR>Les Pays-Bas, comme les autres pays de l?OCDE, sont confrontés à la difficulté de fournir, au meilleur coût, des services de santé et des soins de longue durée de haute qualité à une population vieillissante. Dans le secteur de la santé, des réformes ont déjà été mises en oeuvre en vue d?intensifier la concurrence. Malgré des changements majeurs et certains effets positifs, les réformes risquent de s?enliser, prises en étau entre un système centralisé d?offre et de prix contrôlés par l?État et un système décentralisé fondé sur une concurrence réglementée, n?incitant pas suffisamment à fournir des services de qualité et à maîtriser les dépenses. Les principales difficultés consistent à mener à bien la transition vers un régime de concurrence réglementée dans la prestation de soins de santé, à renforcer le rôle des assureurs en tant qu'agents acheteurs et à assurer la maîtrise des coûts dans un secteur de la santé qui obéit de plus en plus à la demande. En 2012, les réformes ont accru le rôle du marché dans le secteur hospitalier et renforcé les contrôles budgétaires. Ces deux mesures ne sont pas compatibles et risquent de compromettre la réalisation des deux objectifs. Des marchés plus concurrentiels requièrent, au minimum, une information de bonne qualité, un financement approprié et des incitations plus fortes à l?efficience. Compte tenu du vieillissement de la population, les politiques actuelles feront plus que doubler le coût des soins de longue durée au cours des décennies à venir. Il faudrait inciter davantage à l?achat de soins de longue durée efficaces par rapport à leur coût. Cependant, le plan du gouvernement consistant à transférer l?achat de soins de longue durée aux assureurs est voué à l?échec en l?absence de mesures supplémentaires faisant supporter à ces derniers les risques financiers correspondants. Il faudrait en outre encourager les soins à domicile aux dépens des soins en établissement, tout en améliorant le filtrage et la fixation d?objectifs. Ce document de travail se rapporte à l?Étude économique des Pays-Bas de 2012 (www.oecd.org/eco/etudes/Pays-Bas). |
| Keywords: | Netherlands, long-term care, health care reforms, health insurance, hospitals, regulated competition, Pays-Bas, soins de longue durée, réforme des systèmes de santé, assurance santé, hôpitaux, concurrence réglementée |
| JEL: | H51 I11 I18 |
| Date: | 2013–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1010-en&r=ias |