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on Insurance Economics |
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Issue of 2014‒08‒16
ten papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Briggs Depew; James Bailey |
| Abstract: | We investigate the impact of the Affordable Care Act's dependent coverage mandate on insurance premiums. The expansion of dependent coverage under the ACA allows young adults to remain on their parent's private health insurance plans until the age of 26. We find that the mandate has led to a 2.5-2.8 percent increase in premiums for health insurance plans that cover children, relative to single-coverage plans. We find no evidence that the mandate caused an increase in the amount of the employee contribution for family plans. |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2014-07&r=ias |
| By: | O'Donoghue, Erik |
| Abstract: | The first 50 years of the Federal crop insurance program were marked by low enrollment levels. To boost program participation, legislation in 1994 and 2000 increased premium subsidies. In the years since, the jump in enrollment coupled with high commodity prices caused significant increases in program costs. This report examines the effects of premium subsidies on the demand for crop insurance across major crops and production regions. Findings show that while increases in subsidies can induce farmers to enroll more land, they primarily encourage them to adopt higher levels of coverage on land already enrolled. Midwestern and wheat producers are more responsive to changes in subsidies relative to other regions and crops. Findings suggest that changes to current premium subsidies have the potential to alter producers’ reliance on crop insurance to help mitigate farm risk. |
| Keywords: | Crop insurance, risk, insurance demand, premium subsidies, Agricultural Risk Protection Act (ARPA), Agribusiness, Agricultural and Food Policy, Agricultural Finance, Crop Production/Industries, Farm Management, Financial Economics, Institutional and Behavioral Economics, International Development, Land Economics/Use, Risk and Uncertainty, |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:178405&r=ias |
| By: | Dhanaraj, Sowmya |
| Abstract: | The objectives of the study are three-fold: to investigate who are vulnerable to welfare loss from health shocks, what are the household responses to cope with the economic burden of health shocks and if policy responses like state health insurance scheme |
| Keywords: | health shocks, coping strategies, state health insurance scheme, three-level random intercept model |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2014-003&r=ias |
| By: | Petar Jevtic' (Department of Mathematics and Statistics, McMaster University); Luca Regis (IMT Lucca Institute for Advanced Studies) |
| Abstract: | This paper evaluates the solvency of a portfolio of assets and liabilities of an insurer subject to both longevity and financial risks. Liabilities are evaluated at fair-value and, as a consequence, interest-rate risk can affect both the assets and the liabilities. Longevity risk is described via a continuous-time cohort model. We evaluate the effects of natural hedging strategies on the risk profile of an insurance portfolio in run-off. Numerical simulations, calibrated to UK historical data, show that systematic longevity risk is of particular importance and needs to be hedged. Natural hedging can improve the solvency of the insurer, if interest-rate risk is appropriately managed. We stress that asset allocation choices should not be independent of the composition of the liability portfolio of the insurer. |
| Keywords: | longevity risk; natural hedging; continuous-time cohort models for longevity; solvency of insurance portfolios; solvency requirements; longevity and interest-rate risk |
| JEL: | G22 G32 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:7/2014&r=ias |
| By: | Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech); Sébastien Houde (University of Maryland - University of Maryland) |
| Abstract: | We investigate how moral hazard problems can cause sub-optimal investment in energy efficiency, a phenomenon known as the energy efficiency gap. We argue that such problems are likely to be important for home energy retrofits, where both the seller and the buyer can take hidden actions. The retrofit contractor may cut on the quality of installation to save costs, while the homeowner may rebound, that is, increase her use of energy services when provided with higher energy efficiency. We first formalize the double moral hazard problem described above and examine how the resulting energy efficiency gap can be reduced through minimum quality standards or energy-savings insurance. We then calibrate the model to the U.S. home insulation market and quantify the deadweight loss. We find that for a large range of market environments, the welfare gains from undoing moral hazard are substantially larger than the costs of quality audits. They are also about one order of magnitude larger than those from internalizing carbon dioxide externalities associated with the use of natural gas for space heating. Moral hazard problems are consistent with homeowners investing with implied discount rates in the 15-35% range. Finally, we find that minimum quality standards outperform energy-savings insurance. |
| Keywords: | Energy efficiency gap, moral hazard, energy-savings insurance, minimum quality standard |
| Date: | 2014–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-01016109&r=ias |
| By: | International Monetary Fund. European Dept. |
| Keywords: | Fiscal policy;Public investment;Private investment;Insurance;Fiscal reforms;Services sector;Banking sector;Bank supervision;Monetary policy;Macroprudential Policy;Selected issues;Germany; |
| Date: | 2014–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/217&r=ias |
| By: | De Groot, Nynke (Free University Amsterdam); van der Klaauw, Bas (VU University Amsterdam) |
| Abstract: | This paper exploits a substantial reform of the Dutch UI law to study the effect of the entitlement period on job finding and subsequent labor market outcomes. Using detailed administrative data covering the full population we find that reducing the entitlement period increases the job finding rate, but decreases the job quality. Unemployed workers accept more often temporary jobs with lower wages and fewer working hours. Therefore, they also change jobs more frequently. The reform did not affect total post-unemployment earnings indicating that the positive effects on job finding and job turnover cancel out the negative effects on job quality. We also observe a spike in job finding around benefits exhaustion even, although more modest, for individuals who do not experience a drop in benefits level when moving to welfare. |
| Keywords: | unemployment benefits entitlement, job finding, job quality, difference-in-differences, duration model |
| JEL: | J64 J65 C21 C41 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8336&r=ias |
| By: | Falilou Fall; Debra Bloch; Peter Hoeller; Jon Kristian Pareliussen; Mauro Pisu |
| Abstract: | Social institutions face many challenges. The recent economic crisis has provided a stress test as it has left a legacy of high unemployment and high government debt in many countries. It also lowered potential output and thus the revenue base for social protection schemes. At the same time, ageing and other secular trends raise long-term sustainability issues. The design of social institutions determines their capacity to deal with shocks and trend changes and the way risks are shared between the institutions and their stakeholders. They also circumscribe the scope for automatic or discretionary adjustments, when trade-offs between sustainability, adequacy and efficiency arise. This report examines the sustainability of social institutions and their ability to absorb and cope with short-term shocks and longer-term trends by providing risk sharing and expenditure smoothing, focusing on pension, health care and unemployment insurance schemes. Vulnérabilité des institutions sociales Les systèmes de protection sociale sont confrontés à de nombreux défis. La récente crise économique a été un test de robustesse avec son lot de chômage élevé et de hausse de la dette publique dans de nombreux pays. La crise a également réduit le PIB potentiel et donc la base de financement des régimes de protection sociale. Dans le même temps, le vieillissement et les autres tendances séculaires soulèvent des questions de durabilité financière à long terme. Les caractéristiques structurelles des institutions sociales déterminent leur capacité à faire face aux chocs et aux changements de tendance, et également le partage des risques entre les institutions et leurs parties prenantes. Elles définissent aussi la possibilité d’ajustements automatiques ou discrétionnaires lorsqu’il faut faire des arbitrages entre la durabilité financière, l’adéquation des services et des gains d’efficacité. Ce rapport examine la viabilité des institutions sociales et leur capacité à absorber et à faire face aux chocs à court terme et aux tendances de long terme par le partage des risques et le lissage des dépenses, en se concentrant sur les régimes de retraite, de soins de santé et d'assurancechômage. |
| Keywords: | health care, unemployment insurance, pension scheme, social protection, protection sociale, assurance chômage, retraite, santé |
| JEL: | H51 H53 H55 I13 I38 J11 J26 J65 |
| Date: | 2014–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaab:11-en&r=ias |
| By: | Falilou Fall; Mauro Pisu; Jon Kristian Pareliussen; Debra Bloch |
| Abstract: | The recent economic crisis has provided a stress test for the vulnerability of social institutions. This paper assesses the vulnerability of social institutions in light of the current crisis, and surveys past episodes, when social institutions faced similar challenges. Public pay-as-you-go pension systems have generally weathered the crisis well, but private pension funds were severely affected by the financial crisis. While health care spending drifted up further in the early part of the crisis, it levelled off in 2010 and 2011, on average in the OECD, for an unprecedented two years with no spending growth. But, in countries hard hit by the crisis public outlays on health care declined considerably. Unemployment insurance expenditure increased during the crisis in most OECD countries. In some countries, spending rose considerably more than the number of unemployed, reflecting an extension or more generous benefits, while in others the increase was considerably smaller, pointing to adequacy problems of those unemployment insurance schemes. Five country case studies focusing on how social institutions absorbed shocks in the more distant past are also examined and lessons are drawn from these experiences. La vulnérabilité des institutions sociales : Leçons de la récente crise et d'épisodes historiques La récente crise économique a fourni un test de résistance des institutions sociales. Ce document évalue la vulnérabilité des institutions sociales à la lumière de la crise actuelle, et analyse les épisodes passés, quand les institutions sociales ont été confrontées à des défis similaires. Les systèmes de retraite publics en répartition ont généralement bien résisté à la crise, mais les fonds de pension privés ont été durement touchés par la crise financière. Alors que les dépenses de soins de santé ont augmenté jusqu'au début de la crise, elles se sont stabilisées en 2010 et 2011 en moyenne dans l'OCDE. Cette période de deux ans sans croissance des dépenses de santé est sans précédent dans l’OCDE. Mais, dans les pays durement touchés par la crise, les dépenses publiques en soins de santé ont considérablement diminué. Les dépenses de l'assurance chômage ont augmenté au cours de la crise dans la plupart des pays de l'OCDE. Dans certains pays , les dépenses ont augmenté beaucoup plus que le nombre de chômeurs , ce qui reflète une extension ou des prestations plus généreuses, tandis que dans d'autres, l'augmentation a été nettement plus faible, indiquant des problèmes d'adéquation de ces régimes d'assurance-chômage . Cinq études de cas de pays sont également examinés en se concentrant sur la façon dont les institutions sociales ont absorbé les chocs dans un passé plus lointain et des leçons sont tirées de ces expériences. |
| Keywords: | health care, unemployment insurance, pension scheme, social protection, protection sociale, retraites, assurance chômage, santé |
| JEL: | H51 H53 H55 I13 I38 J11 J26 J65 |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1130-en&r=ias |
| By: | Sommer, Kamila (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | This paper studies the link between rising income uncertainty and household fertility patterns in an Aiyagari-Bewley-Huggett framework augmented to include fertility decisions and infertility risk. Building on Becker and Tomes (1976), I model fertility decisions as sequential, irreversible choices over the number of children, accompanied by parental choices of time and money invested toward improving children's quality. The calibrated model is used to quantify the contribution of earnings uncertainty to the changes in the key fertility indicators between steady states. I show that realistic increases in uninsurable earnings risk lead to a postponement in births by young households, and are associated with a decline in the total number of births. The linkage between earnings risk and fertility patterns highlights the important role that labor market conditions can play in determining both short-term cyclical fluctuations in fertility (such as those in the recent U.S. data) and longer-term demographic trends (such as persistently depressed fertility rates in Southern Europe where youth unemployment rates are high and unemployment spell are very persistent). |
| Keywords: | Fertility choice; life cycle; heterogenous agents; uninsurable idiosyncratic income risk |
| Date: | 2014–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-32&r=ias |