nep-ias New Economics Papers
on Insurance Economics
Issue of 2013‒06‒16
eight papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Deposit Insurance and Orderly Liquidation without Commitment: Can we Sleep Well? By Russell Cooper; Hubert Kempf
  2. Universal Coverage on a Budget: Impacts on Health Care Utilization and Out-Of-Pocket Expenditures in Thailand By Supon Limwattananon; Sven Neelsen; Owen O'Donnell; Phusit Prakongsai; Viroj Tangcharoensathien; Eddy van Doorslaer
  3. To love or to pay: Savings and health care in older age. By Loretti I. Dobrescu
  4. Principles of a Two-Tier European Deposit (Re-)Insurance System By Gros, Daniel
  5. Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds By Ellert, Alexander; Urmann, Oliver
  6. Community-based health insurance and social capital: a review By Hermann Pythagore Pierre Donfouet; Pierre-Alexandre Mahieu
  7. Insurance corporations and pension funds in OECD countries By Massimo Coletta; Belen Zinni
  8. Protección frente al desempleo estacional y bolsas de trabajo en Uruguay (1944-1979) By Nicolás Bonino Gayoso; Ulises Garcia Repetto

  1. By: Russell Cooper; Hubert Kempf
    Abstract: This paper studies the provision of deposit insurance along with liquidation decisions without commitment in an economy with heterogenous households. The analysis considers both the control of the balance sheet of a failing bank and the ex post provision of deposit insurance. Redistribution plays a key role in these decisions. When households are identical, deposit insurance will be provided ex post to reap insurance gains. But deposit insurance will not be provided ex post if it requires a (socially) undesirable redistribution of consumption which outweighs insurance gains. Partial deposit insurance may though have value. Heterogeneity across households also impacts the optimal liquidation decision.
    JEL: E42 E58 G01 G18
    Date: 2013–06
  2. By: Supon Limwattananon (International Health Policy Program, Ministry of Public Health, Thailand); Sven Neelsen (Institute of Health Policy and Management, Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam); Phusit Prakongsai (International Health Policy Program, Ministry of Public Health, Thailand); Viroj Tangcharoensathien (International Health Policy Program, Ministry of Public Health, Thailand); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: We estimate the impact on health care utilization and out-of-pocket (OOP) expenditures of a major reform in Thailand that extended health insurance to one-quarter of the population to achieve universal coverage while keeping health spending below 4% of GDP. Identification is through comparison of changes in outcomes of groups to whom coverage was extended with those of public sector employees and their dependents whose coverage was not affected. The reform is estimated to have reduced the probability that a sick person goes without formal treatment by 3.2 percentage points (11%). It increased the probability of receiving public ambulatory care by 2.7 ppt (5%) and of admission to a public hospital by 1 ppt (18%). OOP expenditures were reduced by one-third on average, as was the probability of spending more than 10% of the household budget on health care, while spending at the very top of the OOP distribution was reduced by one-half representing substantial reductio ns in exposure to medical expenditure risk. Supply-side measures implemented with the coverage extension are likely to have helped realize these effects from an increased, but still very tight, budget.
    Keywords: Health Insurance, Health Care, Medical Expenditures, Universal Coverage, Thailand
    JEL: H42 H51 I18
    Date: 2013–05–16
  3. By: Loretti I. Dobrescu (University of New South Wales)
    Abstract: This paper develops a dynamic structural life-cycle model to study how heterogeneous health and medical spending shocks a¤ect the savings behavior of the elderly. Individuals are allowed to respond to health shocks in two ways: they can directly pay for their health care expenses (self-insure) or they can rely on health insurance contracts. There are two possible insurance options, one through formal contracts and another through informal care provided by family. Formal contracts may be a¤ected by asymmetric information problems, whereas informal insurance depends on social ties (cohesion) and on bequeathable wealth. I estimate the model on SHARE data using simulated method of moments for four levels of wealth in a sample of single retired Europeans. Counterfactual experiments show that health, medical spending and health insurance are indeed the main drivers of the slow wealth decumulation in old age. I also fi?nd that social cohesion rises with age, declines with wealth and is higher in Mediterranean countries than in Central European and Scandinavian countries. Finally, high social cohesion appears typically associated with increased life expectancy.
    Keywords: savings, health, health insurance, social cohesion, life expectancy
    JEL: D1 D31 E27 H31 H51 I1
    Date: 2012–12
  4. By: Gros, Daniel
    Abstract: There is general agreement that banking supervision and resolution have to be organised at the same level. It is often argued, however, that there is no need to tackle deposit insurance because it is too politically sensitive. This note proposes to apply the principles of subsidiarity and re-insurance to deposit insurance: Existing national deposit guarantee schemes (DGSs) would continue to operate much as before (with only minimal standards set by an EU directive), but they would be required to take out re-insurance against risks that would be too large to be covered by them. A European Reinsurance Fund (EReIF) would provide this reinsurance financed by premia paid by the national DGSs, just as any reinsurance company does in the private sector. The European Fund would pay out only in case of large losses. This ‘deductible’ would provide the national authorities with the proper incentives, but the reinsurance cover would stabilize depositor confidence even in the case of large shocks. Ideally the national DGSs would be responsible also for resolution. Experience has shown banking systems are more stable if deposit insurers are also responsible for resolution. The approach proposed here could thus be also used to design the ‘Single Resolution Mechanism’ (SRM) which is being discussed as a complement to the ‘Single Supervisory Mechanism’ (SSM). It will of course take time to build up the funding for such a reinsurance fund. This approach is thus not meant to deal with legacy problems from the current crisis.
    Date: 2013–04
  5. By: Ellert, Alexander; Urmann, Oliver
    Abstract: This paper examines the competition of nonprofit sickness funds in the market for supplementary health insurance. We investigate product quality strategies when quality is costly and the sickness funds are competing for customers. As long as the sickness funds choose the qualities for simultaneously, any equilibrium will be nondifferentiated. Only if total demand is increasing in quality, both sickness funds provide the maximum quality. For decreasing total demand the existence of an equilibrium depends on the consumers' sensitivity. If there is no equilibrium in the simultaneous competition, sequential quality competition leads to a differentiated equilibrium with a first mover advantage. --
    Keywords: supplementary health insurance,vertical differentiation,output maximization
    JEL: I11 L22 L30
    Date: 2012
  6. By: Hermann Pythagore Pierre Donfouet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Pierre-Alexandre Mahieu (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: Community-Based Health Insurance (CBHI) is an emerging concept for providing financial protection against the cost of illness and improving access to quality health services for low-income rural households who are excluded from formal insurance. CBHI is currently being provided in some rural areas in developing countries and there is ongoing research about its impact on the well-being of the poor in these areas. However, the success of CBHI revolves around the existence of social capital in the community. This has led researchers to explore the impact of CBHI on the well-being of the poor in rural areas, especially as it relates to social capital. The overall objective of this paper is to review recent developments that address the link between CBHI and social capital. Policy implications are also discussed.
    Keywords: Community-based health insurance ; social capital ; rural areas
    Date: 2012
  7. By: Massimo Coletta (Banca d'Italia); Belen Zinni (OECD)
    Abstract: Insurance companies and pension funds are part of complex systems of private insurance and public social protection created to reduce the cost of economic hazards. In the current phase of the business cycle, with many OECD countries struggling with low economic growth, high public deficits and debts, ageing populations and expensive welfare systems, private insurance is bound to play an increasing role. The aim of this paper is to provide an overview of the evolution of insurance companies and pension funds in OECD countries over the period 1995-2009. Secondly, it examines the impact of this evolution on households’ financial wealth. The paper finds that both insurance companies and private pensions still account for a small share of the financial sector as a whole and that the recent financial crisis has significantly reduced their asset value. These institutions nonetheless account for an increasing share of households’ financial assets. The paper also calls for further improvements in the consistency between supervisory and national accounting standards and in overall data quality to enhance cross-country data comparability and support the policy-making process.
    Keywords: insurance companies, pension funds
    JEL: G22 G23
    Date: 2013–06
  8. By: Nicolás Bonino Gayoso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Ulises Garcia Repetto (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: During the first half of the 20th century the Uruguayan government tried to implement, although with no success, a general unemployment insurance (UI) scheme for workers in the private sector, which included an employment service. The only time that employers´ traditional opposition to an employment service was overcome and a regime of this type was implemented occurred in order to address seasonal unemployment in the meatpacking and wool and leather warehousing sectors (1944-1979). These were key sectors in the Uruguayan economy of the time, considering their position as exporters and foreign currency earners, and taking into account that the government was promoting economic structural change via a process of industrialization. Although these institutions offered protection and job stability to a large number of seasonal workers, the financial design of the UI repeated a recurring defect of the Uruguayan social security system, namely structural failures in its sources of finance. A few years after the system was launched, it began registering continuous financial deficits. These deficits required government assistance, turning these benefits for seasonal workers into an economic weight for Uruguayan society as a whole.
    Keywords: Unemployment insurance, employment service, seasonal unemployment, social security, public finances.
    JEL: N46 J65 H55
    Date: 2013–05

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