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on Insurance Economics |
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Issue of 2014‒08‒20
twelve papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | International Monetary Fund. Monetary and Capital Markets Department |
| Keywords: | Financial Sector Assessment Program;Insurance supervision;Insurance regulations;Reports on the Observance of Standards and Codes;Hong Kong SAR; |
| Date: | 2014–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:14/206&r=ias |
| By: | Briggs Depew; Eric Cardella |
| Abstract: | We exploit a sharp change in the likelihood that an individual is covered by health insurance when they turn 19 years of age to study how health insurance affects reported health status. We find that an individual is 6 percentage points less likely to have health insurance when they turn 19. Using a fuzzy regression discontinuity design, we find that having health coverage significantly increases the likelihood of reporting excellent health among young adults. |
| URL: | http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2014-08&r=ias |
| By: | Asian Development Bank (ADB); (Southeast Asia Department, ADB); ; |
| Abstract: | The Asian Development Bank (ADB) has been one of the few active partners for microfinance development in the Philippines. It has contributed to the growth of formal microfinance activities, including expanding the outreach of diversified formal financial services to poor clients at the most affordable costs. The risk of making poor clients worse off because of unexpected events gave rise to the formation of ADB’s intervention focusing on microinsurance development. This report provides the initial sector assessment on emerging microinsurance activities and hopefully guidance on the way forward. |
| Keywords: | microinsurance, microfinance, credit, low-income people, climate change, natural disasters, premiums , caps, microfinance institutions, financial services, coverage, risks, health insurance, disability insurance, crop insurance, cattle insurance, banks, cooperatives |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt125189&r=ias |
| By: | Andreas A. Jobst; Nobuyasu Sugimoto; Timo Broszeit |
| Abstract: | Over the last decade, stress testing has become a central aspect of the Fund’s bilateral and multilateral surveillance work. Recently, more emphasis has also been placed on the role of insurance for financial stability analysis. This paper reviews the current state of system-wide solvency stress tests for insurance based on a comparative review of national practices and the experiences from Fund’s FSAP program with the aim of providing practical guidelines for the coherent and consistent implementation of such exercises. The paper also offers recommendations on improving the current insurance stress testing approaches and presentation of results. |
| Date: | 2014–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/133&r=ias |
| By: | Jean-Baptiste Michau (Ecole Polytechnique, France) |
| Abstract: | This paper investigates the provision of insurance to workers against search-induced wage fluctuations. I rely on numerical simulations of a model of on-the-job search and precautionary savings. The model is calibrated to low skilled workers in the U.S.. The extent of insurance is determined by the degree of progressivity of a non-linear transfer schedule. The fundamental trade-off is that a more generous provision of insurance reduces incentives to search for better paying jobs, which is detrimental to the production efficiency of the economy. I show that progressivity raises the search intensity of unemployed worker, which reduces the equilibrium rate of unemployment, but lowers the search intensity of employed job seekers, which results in a lower output level. I also solve numerically for the optimal non-linear transfer schedule. The optimal policy is to provide almost no insurance up to a monthly income level of $1450, such as to preserve incentives to move up the wage ladder, and full insurance above $1650. This policy halves the standard deviation of labor incomes, increases output by 2.4% and generates a consumption-equivalent welfare gain of 1.3%. Forbidding private savings does not fundamentally change the shape of the optimal transfer function, but tilts the optimal policy towards more insurance at the expense of production efficiency. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:112&r=ias |
| By: | Liran Einav (Stanford University); Amy Finkelstein (Stanford University); Heidi Williams (MIT Department of Economics) |
| Abstract: | We present a simple framework to illustrate the welfare consequences of a “top up” health insurance policy that allows patients to pay the incremental price for more expensive treatment options. We contrast it with common alternative policies that require essentially no incremental payments for more expensive treatments (as in the United States), or require patients to pay the full costs of more expensive treatments (as in the United Kingdom). We provide an empirical illustration of this welfare analysis in the context of treatment choices among breast cancer patients, where lumpectomy with radiation therapy is a more expensive treatment than mastectomy, with similar average health benefits. We use variation in distance to the nearest radiation facility to estimate the relative demand for lumpectomy and mastectomy. Extrapolating the resultant demand curve (grossly) out of sample, our estimates suggest that the “top-up” policy, which achieves the efficient treatment decision, increases total welfare by $700-2,500 per patient relative to the current US “full coverage” policy, and by $700-1,800 per patient relative to the UK “no top up” policy. While we caution against putting much weight on our specific estimates, the analysis illustrates the potential welfare gains from more efficient reimbursement policies for medical treatments. We also briefly discuss additional tradeoffs that arise from the top-up and UK-style policies, which both lead to additional (ex-ante) risk exposure. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:13-034&r=ias |
| By: | Charles Sutcliffe (ICMA Centre, Henley Business School, University of Reading); |
| Abstract: | Annuities are perceived as being illiquid financial instruments, and this has limited their attractiveness to consumers and inclusion in financial models. However, short positions in annuities can be replicated using life insurance and debt, permitting long positions in annuities to be offset, or short annuity positions to be created. The implications of this result for the annuity puzzle, arbitrage between the annuity and life insurance markets, and speculation on expected longevity are investigated. It is argued that annuity replication could help solve the annuity puzzle, improve the price efficiency of annuity markets and promote the inclusion of annuities in household portfolios |
| Keywords: | Annuities, annuity puzzle, arbitrage, longevity, speculation, portfolios, life insurance |
| JEL: | G12 G22 G23 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:icmadp:icma-dp2013-06&r=ias |
| By: | Melissa A. Boyle; Joanna N. Lahey |
| Abstract: | Measuring the overall impact of public health insurance receipt is important in an era of increased access to publicly-provided and subsidized insurance. Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While theory predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion. Our findings suggest that although household labor supply may decrease because of the income effect, wives’ labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth. Moreover, wives with employer-provided health insurance in the previous year remain on the job while those without increase their hours, suggesting incentives to retain or obtain health insurance. Finally, non-working wives enter the labor force, those who were working part-time increase their hours, and full-time “career” women are largely unaffected. |
| JEL: | H42 I13 J14 J22 J26 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20371&r=ias |
| By: | H. Elizabeth Peters; Kosali Simon; Jamie Rubenstein Taber |
| Abstract: | Despite the high levels of marital disruption in the United States, and substantial reliance on family-based health insurance, little research is available on the consequences of marital disruption for insurance coverage among men, women, and children. We address this shortfall by examining patterns of coverage surrounding marital disruption. We find large differences in coverage across marital status groups in the cross-section. In longitudinal analyses that focus on within-person change, we find small overall coverage changes but large changes in type of coverage following marital disruption. Both men and women show increases in private coverage in their own names, but offsetting decreases in dependent coverage tend to be larger. Dependent coverage for children also declines after marital dissolution, even though children are still likely to be eligible for that coverage. Children and, to a lesser extent, women show increases in public coverage around the time of divorce or separation. The most vulnerable group appears to be lower-educated women with children because the increases in private, own-name, and public insurance are not large enough to offset the large decrease in dependent coverage. As the United States implements federal health reform, it is critical that we understand the ways in which life course events—specifically, marital disruption—shape the dynamic patterns of coverage. |
| JEL: | I13 J12 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20233&r=ias |
| By: | Jon Kristian Pareliussen |
| Abstract: | Unemployment insurance is a key tool for risk sharing and redistribution and also a prominent automatic stabiliser. It is a volatile spending item by design, which can lead to vulnerabilities. This paper explores various shocks and sources of vulnerability of the unemployment insurance schemes of OECD and BRIICS countries. Policies that boost both financial resilience and benefit adequacy as well as policy trade-offs are explored. Four country clusters are identified with key similarities in the overall policy mix that can shed light on why some countries boast generous benefits and at the same time display high economic efficiency, while other countries face a much more pronounced trade-off. Surmonter les vulnérabilités des systèmes d'assurance chômage L’assurance chômage est un instrument clé de mutualisation des risques et de redistribution, et c’est aussi un stabilisateur automatique majeur. C’est, fondamentalement, un poste de dépenses volatile, ce qui peut entraîner des vulnérabilités. Ce document examine divers chocs et sources de vulnérabilité pour les systèmes d’assurance chômage des pays de l’OCDE et pays BRIICS. Les politiques de nature à améliorer à la fois la résilience financière et le caractère suffisant des prestations, ainsi que les choix à opérer, y sont examinés. Quatre groupes de pays présentant d’importantes similitudes de par l’éventail des politiques mises en oeuvre y sont identifiés, ce qui permet de mieux comprendre pourquoi certains pays enregistrent à la fois des prestations généreuses et de faibles inégalités de revenu en même temps qu’un haut niveau d’efficience économique, tandis que, dans d’autres, ces situations apparaissent beaucoup plus difficiles à concilier. |
| Keywords: | unemployment, unemployment insurance, employment services, labour market policies, chômage, services de l'emploi, assurance chômage, politique du marché du travail |
| JEL: | J21 J40 J65 J68 |
| Date: | 2014–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1131-en&r=ias |
| By: | Anton Korinek; Alp Simsek |
| Abstract: | We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited by the zero lower bound, aggregate demand is insufficient and the economy enters a liquidity trap. In such an environment, agents' exante leverage and insurance decisions are associated with aggregate demand externalities. The competitive equilibrium allocation is constrained inefficient. Welfare can be improved by ex-ante macroprudential policies such as debt limits and mandatory insurance requirements. The size of the required intervention depends on the differences in marginal propensity to consume between borrowers and lenders during the deleveraging episode. In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage. |
| Keywords: | Macroprudential Policy;Monetary policy;Liquidity;Demand;Borrowing;Debt markets;Economic recession;Equilibrium. Econometric models;Leverage, liquidity trap, zero lower bound, aggregate demand externality, efficiency, macroprudential policy, insurance |
| Date: | 2014–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/129&r=ias |
| By: | Marianne P. Bitler; Madeline Zavodny |
| Abstract: | We review the existing literature about the effects of the Medicaid program. We first describe the program’s structure and how it has changed over time. We then discuss findings on coverage, crowd out, take-up and health. Finally, we look at effects of the program on non-health outcomes such as welfare use and labor supply, marriage and fertility, and savings. |
| JEL: | I1 I13 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20169&r=ias |