nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒10‒17
six papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Examining Adverse Selection in Organic Crop Insurance: Where Do We Go From Here? By Glenn, Viola; Dale, Kelli; Sligh, Michael; Robinson, James
  2. Deposit Insurance Adoption and Bank Risk-Taking: the Role of Leverage By M. Lé
  3. A joint longitudinal and survival model with health care usage for insured elderly By Xavier Piulachs; Ramon Alemany; Montserrat Guillen
  4. Health Financing Options for Samoa : Challenges and Opportunities By Ian Anderson
  5. Impact of Increased Crop Insurance Enrollment on Cropping of Environmentally Sensitive Land By Holderieath, Jason
  6. Défaillances dans le secteur de l’assurance vie au Japon dans les décennies 1990 et 2000. By Bernard R.; La Motte L.

  1. By: Glenn, Viola; Dale, Kelli; Sligh, Michael; Robinson, James
    Abstract: Understanding when and why organic farmers use crop insurance can not only instruct the design of an equitable and financially sustainable crop insurance system but also identify production methods that decrease dependence on program-based risk management. In this article, the research team will identify factors influencing organic farmers’ decision to purchase or forgo crop insurance. Do organic farmers opt out of crop insurance because it is not cost-effective, because alternative risk management tools are preferred, due to barriers to access, or for some other reason? Understanding the drivers of and barriers to crop insurance use by organic producers can inform crop insurance designs that meet producer needs as well as illustrate alternative risk management methods that should not be lost as a result of the crop insurance safety net.
    Keywords: Farm Management, Risk and Uncertainty,
    Date: 2014–09
  2. By: M. Lé
    Abstract: Explicit deposit insurance is a crucial ingredient of modern financial safety nets. This paper investigates the effect of deposit insurance adoption on individual bank leverage. Using a panel of banks across 117 countries during the period 1986-2011, I show that deposit insurance adoption pushes banks to increase significantly their leverage by reducing their capital buffer. This increase in bank leverage then translates into higher probability of insolvency. Most importantly, I bring evidence that deposit insurance adoption has important competitive effects: I show that large, systemic and highly leveraged banks are unresponsive to deposit insurance adoption.
    Keywords: Deposit Insurance, Bank Risk-Taking, Leverage, Systemic Bank, Capital Buffer.
    JEL: G18 G21 G28 G32
    Date: 2013
  3. By: Xavier Piulachs (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona); Ramon Alemany (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona); Montserrat Guillen (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona)
    Abstract: We study longevity and usage of medical resources of a sample of individuals aged 65 years or more who are covered by a private insurance policy. A longitudinal analysis is presented, where the yearly cumulative number of medical coverage requests by each subject characterizes insurance intensity of care until death. We confirm that there is a significant correlation between the longitudinal data on usage level and the survival time processes. We obtain dynamic estimations of event probabilities and we exploit the potential of joint models for personalized survival curve adjustment.
    Keywords: joint modeling, health insurance, personalized survival probability, longitudinal data
    Date: 2014–08
  4. By: Ian Anderson
    Abstract: Samoa currently faces two important public policy challenges in the health sector. One is to stem, and then reverse, the rapid rise of non-communicable diseases (NCDs). The second challenge is to put the country on a health-financing path that is effective, efficient, and financially affordable and sustainable. The two challenges are interconnected. This discussion paper examines eight options to address these challenges. The eight options are the following: (1) increasing government expenditure via higher general taxation; (2) increasing government expenditure via deficit financing; (3) increasing the share of government expenditure to health; (4) increasing external and donor financing; (5) increasing specific taxes; (6) mobilizing additional nongovernment resources via insurance (including social health insurance, and community and private insurance); (7) increasing cost-recovery measures; and (8) increasing efficiency. The paper concludes that the chief opportunity arises from more efficient use of resources already in the health system that are not presently used to maximum effect. Improving technical and allocative efficiency of the existing system has the potential to make a large difference and is technically feasible.
    Keywords: addiction, administrative costs, adolescents, alcohol consumption, allocation, allocation of resources, allocative efficiency, Annual Report, Antenatal care, Article, ... See More + budget documents, budget outlook, burden of disease, cancer patient, cancer patients, capital costs, cardiovascular diseases, central bank, child health, chlamydia, clinical services, clinics, communicable diseases, cost of services, cost of treatment, cost recovery, cost sharing, cost-effectiveness, cost-recovery, costs of health care, counseling, curative health care, deaths, debt, deficit financing, dental care, determinants of health, diabetes, diets, disasters, doctors, donor assistance, donor financing, economic downturns, economic growth, economic shocks, economies of scale, employment, essential drugs, essential health care, exchange rates, external shocks, families, family planning, Finance Ministry, financial barriers, financial cost, financial health, financial management, financial management systems, financial protection, financial resources, financial risk, financial risk protection, financial sector, financial statements, financial years, fiscal deficit, food security, foreign exchange, Foreign loans, gallstones, general taxation, girls' education, government expenditure, health behavior, health care, health care access, health care expenditure, health care providers, health care resources, health care system, health care­service delivery, health effects, health expenditure, health expenditure per capita, health expenditures, health facilities, HEALTH FINANCING, health funding, health information, health insurance, health interventions, Health Organization, health outcome, health outcomes, health plan, health professionals, health promotion, health resources, health sector, Health Service, health services, Health Specialist, health spending, health status, health system, HEALTH SYSTEMS, health workforce, health-care, health-care costs, HEALTH-FINANCING, health-financing system, high blood pressure, hospital admissions, hospital buildings, hospitals, household income, Human Development, human resources, hygiene, hypertension, illness, immunization, income, income countries, income distribution, income groups, income growth, infant mortality, infant mortality rate, infants, infectious diseases, inflation, Influenza, infrastructure projects, injuries, inpatient care, insurance, Life expectancy, Life expectancy at birth, living standards, local currency, low income, low-income countries, macroeconomic variables, marijuana, market failures, medical care, medical supplies, Medical Treatment, medicines, Medium-Term Expenditure, Medium-Term Expenditure Framework, Mental Health, midwifery, Ministry of Finance, monetary policies, mortality, national budgets, national health, National Health Service, National Health Services, natural disasters, Nurses, Nursing, Nutrition, Obesity, output levels, palliative care, patient, Patient treatment, patients, performance framework, pharmacy, physical activity, physicians, pocket payment, polio, postnatal care, price elasticities, private health insurance, private insurance, private pharmacies, private sector, programs, provider payment, public expenditure, Public Expenditure on Health, public health, public health care, public health interventions, public health services, public health system, public provision, public sector, quality of health, quality of services, reform agenda, rehabilitation, risk factors, sanitation, screening, sector policies, sexually transmitted infections, smoking, Social Development, social health insurance, STIs, structural reforms, suicide, surgery, Total expenditure, traditional health care, treatment, tuberculosis, uncertainty, under-five mortality, vaccination, vaccinations, wounds
    Date: 2013–08
  5. By: Holderieath, Jason
    Abstract: Recently, the Federal Crop Insurance Program (FCIP) has come under fire from both popular press (e.g. Nixon 2012), the academic press (e.g. Hennessy 2011; Wright and Wimberly 2013), and this criticism is reflected in government publications (e.g. Shields 2012; US GAO 2007). The common argument is that subsidized crop insurance encourages expansion of cropping onto otherwise unsuitable land. In particular, the argument equates low productivity or high yield risk with environmental sensitivity (Nixon 2012; Hennessy 2011). In part, this conflation is due to the concern over land use change from the Conservation Reserve Program (CRP) to cropping. CRP was, by construction, designed to take low productivity land out of production. In addition to CRP conversion, concern has focused on grassland conversion to crop land (Archer 2011; Johnston 2011; Hennessy 2011; Wright and Wimberly 2013). The United States Government Accountability Office recognized the land use change and the possibility that federal programs were influencing land use choices and recommended that the executive branch investigate. The environmental effects of increased cropping use of environmentally sensitive land include erosion (which would lead to increased nutrient and sediment pollution), carbon release in conversion and reduction in carbon sequestration in future This paper will empirically test the assertion that crop insurance, broadly stated, is a causal factor in increased cropping land use. Data from The United States Department of Agriculture’s National Agricultural Statistics Service (NASS), The United States Department of Agriculture’s Risk Management Agency (RMA), The National Oceanic and Atmospheric Administration’s National Climatic Data Center, The Board of Governors of the Federal Reserve System, and The Federal Reserve Bank of Kansas City was compiled in Stata® for use in this analysis. This data was collected covering the period between 1981 and 2013 for Colorado, Kansas, Nebraska, Wyoming, Oklahoma, and Missouri. In 2013, these states grew twenty percent and eighteen percent of the corn and soybean, respectively, production in the US. Corn and Soybean production made up fifty and twenty-two percent of these states total crop production. These states are important to national production of corn and soybeans and these two crops are important to these states. If we accept that environmentally sensitive and marginal land are the same, as the press suggesting the existence of a link propose, one should expect that county yields would fall with higher levels of insurance participation. Further, if the effect is linear one would expect a statistically significant negative link between the proportion of land enrolled in crop insurance and county yields. The obvious dependent variable would look at acres, however with the length of CRP contracts, crop rotation, and the possibility of grassland or woodlot conversion to cropland suggested that the dependent variable would have to measure the quality of production rather than the acres carried out on. Supposing the relationship to be linear, a robust random effects generalized least squares regression model was built to test for the relationship between enrollment and yield. Results indicate that the link between crop insurance participation and yield is negative and statistically significant. It does appear that crop insurance participation has something to do with increased cropping of environmentally sensitive land, but further research is needed to confirm this result.
    Keywords: Crop Insurance, Panel Data, Environmentally Sensitive Land, Agricultural and Food Policy, Land Economics/Use, Q5, Q180,
    Date: 2014
  6. By: Bernard R.; La Motte L.
    Abstract: Le contexte actuel de faiblesse des taux d’intérêt de long terme pourrait faire craindre que le secteur de l’assurance-vie ne connaisse des difficultés similaires à celles des assureurs-vie japonais dans les années 1990. La crise des assureurs-vie japonais est principalement liée à une surévaluation des taux garantis sur les contrats au regard du rendement de l’actif : alors que les rendements de leurs actifs diminuaient, les organismes, encouragés par les pouvoirs publics, continuaient d’offrir des rémunérations élevées pour contenir la chute des nouvelles souscriptions. À la fin des années 1990, le gouvernement japonais s’est retrouvé dans l’incapacité d’empêcher la faillite de certains assureurs-vie en grandes difficultés financières. L’intervention de l’État a été rendue nécessaire compte tenu du poids du secteur dans l’économie. Au total, ce sont 7 assureurs-vie qui ont fait faillite au Japon entre 1997 et 2001, avec un 8ème en 2008, pour un coût total pour la collectivité de 3 496 GJPY (28,5 GEUR), soit 0,7% du PIB. Ces faillites ont imposé une réforme de l’Insurance Business Act : mise en place de mesures de surveillance préventives, notamment le calcul d’un ratio de solvabilité basé sur les risques, possibilité de réviser à la baisse les taux garantis dans les contrats des sociétés en difficulté et création d’un fonds de garantie (PPCJ) avec la garantie de l’État japonais pour sauvegarder les intérêts des assurés. Les mesures prises par le gouvernement japonais ont permis d’enrayer le nombre de faillites et de rétablir la solvabilité et la rentabilité du secteur de l’assurance-vie. La faible exposition des assureurs-vie au secteur bancaire a permis d’éviter la contagion à ce secteur. La faiblesse actuelle des taux d’intérêt de long terme en Europe semble évoquer l’environnement japonais des années 1990. Par ailleurs, l’entrée en vigueur en janvier 2016 de Solvabilité II va améliorer la prise en considération des risques d’un tel scénario (environnement de taux bas, taux garantis élevés, augmentation des rachats, concentration des actifs). Les risques émanant d’une telle situation seront captés dans la meilleure estimation des provisions (best estimate) et dans le capital de solvabilité requis. En outre, une modélisation précise des rachats (structurels et conjoncturels) sera attendue et l’application des deux principes de Liberté d’investissement, d’une part, et Personne Prudente, d’autre part, supplanteront les règles explicites de diversification et de concentration des placements. Au-delà des éléments quantitatifs, l’introduction de la notion de « système de gouvernance » renforce la prise en considération du scénario japonais sous Solvabilité II. Par ailleurs, la mise en place d’outils prudentiels complémentaires (exercices de stress tests, enquêtes sur le niveau des taux garantis, contrôles sur place et sur pièces) renforcera la supervision prudentielle dans un contexte « à la japonaise ».
    Keywords: Assurance Vie, Faillites, Japon, Bas niveau des taux d’intérêt, Taux Garantis.
    JEL: G22
    Date: 2014

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