nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒05‒09
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Health Insurance and the Demand for Medical Care: Instrumental Variable Estimates Using Health Insurer Claims Data By Abe Dunn
  2. What Kinds of Health Insurance Do Small Businesses Offer? Results from a Survey of Five States. By Catherine McLaughlin; Adam Swinburn
  3. Uncertain Costs and Vertical Differentiation in an Insurance Duopoly By Radoslav S. Raykov
  4. Labour Market Matters - April 2014 By Tran, Vivian
  5. Economic resilience: definition and measurement By Hallegatte, Stephane
  6. Croissance et assurance. Controverses théoriques et réalités dans les pays du Maghreb By Nemiri-Yaïci Farida; Benahmed Kafia

  1. By: Abe Dunn (Bureau of Economic Analysis)
    Date: 2014–03
  2. By: Catherine McLaughlin; Adam Swinburn
    Abstract: This brief found that small businesses that continue to offer coverage will face changes in what plans are available to offer. As individual and Small Business Health Options Program (SHOP) exchanges are developed, employees of small businesses will likely receive more choices and more comprehensive coverage, possibly at more competitive prices.
    Keywords: Health Insurance, Small Businesses, Survey, Alabama, Colorado, Minnesota, New York, Oregon
    JEL: I
    Date: 2014–04–30
  3. By: Radoslav S. Raykov
    Abstract: Classical oligopoly models predict that firms differentiate vertically as a way of softening price competition, but some metrics suggest very little quality differentiation in the U.S. auto insurance market. I explain this phenomenon using the fact that risk-averse insurance companies with uncertain costs face incentives to converge to a homogeneous quality. Quality changes are capable of boosting as well as reducing profits, since quality differentiation softens price competition, but also undermines the lower-end firm’s ability to charge the markup commanded by risk aversion. This can make differentiation suboptimal, leading to a homogeneous quality; the outcome depends on consumers’ quality tastes and on how costly quality is. Additional trade-offs between quality costs, profits and profit variances compound this effect, resulting in equilibria at very low quality levels. I argue that this provides one explanation of how insurer competition drove quality down in the nineteenth-century U.S. market for fire insurance.
    Keywords: Market structure and pricing; Economic models
    JEL: G22 D43 L22 D81
    Date: 2014
  4. By: Tran, Vivian
    Abstract: Examples of educational mismatch and overqualifcation in the labour market can often be found in the same office building – the clerical worker with a bachelor’s degree reporting to a manager with a high school education – as an example. Some have argued that mismatch in general is a result of poor economic conditions; however, a paper entitled “Labor Market Conditions, Skill Requirements and Education Mismatch†(CLSRN Working Paper no.134) by CLSRN affiliate Fraser Summerfield (University of Guelph) provides evidence that the pattern of increased overqualification during economic downturns is partially due to relative changes in the type of jobs available at these times. Unemployment Insurance (UI) helps individuals transition through difficult economic situations such as periods of unemployment, and underemployment. While UI provides insurance to households by helping them “smooth consumption†during a period of unemployment, studies have found evidence of moral hazard– raising UI benefits encourages longer unemployment spells. However, the previous literature has not distinguished between changes in benefits when labour market conditions are good, and changes in benefits when labour market conditions are poor. If either the consumption smoothing benefit or the moral hazard cost of UI depends on labour market conditions, this may imply that optimal UI benefits should respond to shifts in labour demand. A study entitled “Should Unemployment Insurance vary with the Unemployment Rate? Theory and Evidence†(CLSRN Working Paper no. 104) by CLSRN affiliates Kory Kroft (University of Toronto) and Matthew Notowidigdo (Booth School of Business, University of Chicago) examines how optimal UI benefits vary over the course of the business cycle by estimating how the moral hazard cost and the consumption smoothing benefit of UI vary with the unemployment rate.
    Keywords: Mismatch, Job Search, Overeducation, Skill Demand, Business Cycles, Unemployment Insurance, Business Cycle, Moral Hazard, Consumption Smoothing
    JEL: E24 E32 J24 J63 J64 H5 J65
    Date: 2014–04–29
  5. By: Hallegatte, Stephane
    Abstract: The welfare impact of a disaster does not only depend on the physical characteristics of the event or its direct impacts in terms of lost lives and assets. Welfare impacts also depend on the ability of the economy to cope, recover, and reconstruct and therefore to minimize aggregate consumption losses. This ability can be referred to as the macroeconomic resilience to natural disasters. Macroeconomic resilience has two components: instantaneous resilience, which is the ability to limit the magnitude of immediate production losses for a given amount of asset losses, and dynamic resilience, which is the ability to reconstruct and recover. Welfare impacts also depend on micro-economic resilience, which depends on the distribution of losses; on households'vulnerability, such as their pre-disaster income and ability to smooth shocks over time with savings, borrowing, and insurance, and on the social protection system, or the mechanisms for sharing risks across the population. The (economic) welfare disaster risk in a country can be reduced by reducing the exposure or vulnerability of people and assets (reducing asset losses), increasing macroeconomic resilience (reducing aggregate consumption losses for a given level of asset losses), or increasing microeconomic resilience (reducing welfare losses for a given level of aggregate consumption losses). The paper proposes rules of thumb to estimate macroeconomic and microeconomic resilience based on the relevant parameters in the economy. It also provides a toolbox of policies to increase macro- or micro-economic resilience and a list of indicators that can be used to build a resilience indicator.
    Keywords: Economic Theory&Research,Natural Disasters,Climate Change Economics,Insurance&Risk Mitigation,Labor Policies
    Date: 2014–05–01
  6. By: Nemiri-Yaïci Farida; Benahmed Kafia
    Abstract: Depuis quelques décennies, le secteur des assurances est considéré comme un service stratégique de la nouvelle économie. En effet, à travers ses multiples fonctions de transfert des risques, mobilisation de l’épargne, allocation des ressources et information, l’assurance contribue à la réduction de l’incertitude et à la sécurité de l’homme et de ses activités. L’assurance occupe donc une place importante dans l’économie. Outre les garanties qu'elle offre, l’assurance se présente comme un des secteurs privilégiés susceptibles de jouer un rôle déterminant dans la croissance économique. Partant de cette thèse, ce travail a pour objet d’évaluer les liens entre l’assurance et la croissance économique en effectuant une étude comparative entre les trois pays maghrébins (Maroc, Tunisie, Algérie).
    Keywords: Assurance, primes d’assurances, assurance vie, assurance non vie, croissance économique, Maroc, Tunisie, Algérie
    Date: 2014–03

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