nep-ias New Economics Papers
on Insurance Economics
Issue of 2015‒06‒20
four papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Policy Drivers: Charting the New Course for U.S. Insurance Companies By Karen Shaw Petrou
  2. Insurance Regulation in the Dodd-Frank Era By Hester Peirce
  3. Maduración del Sistema Previsional. Proyecciones y agenda By Cecilia Dassatti; Natalia Mariño
  4. Estimating Equilibrium in Health Insurance Exchanges: Analysis of the Californian Market under the ACA By Pietro Tebaldi

  1. By: Karen Shaw Petrou
    Abstract: This policy brief does not address the question of whether systemic designation and related regulation is the correct policy for U.S. insurance companies, nor does it discuss the types of rules that should or should not apply to U.S. insurance companies regardless of size or charter. Instead, it assesses current and prospective policy drivers – legislative, regulatory, and public-policy forces – to demonstrate their competitive impact and the emerging reconfiguration of financial services in the U.S., as well as resulting competitiveness and corporate-governance challenges. Winners and losers on both a line-of-business and franchise basis are defined based on Federal Financial Analytics’ proprietary advisory practice.
    Keywords: systemic designation, insurance regulation, SIFIs, capital rules
    Date: 2015–03
  2. By: Hester Peirce
    Abstract: The wrenching financial crisis of 2007 to 2009 triggered an intense period of regulatory reflection. The congressional response - the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) - substantially reshaped the country's financial regulatory framework. The new framework reflects a deep confidence in federal regulators to identify systemic problems and prevent them from causing system crises. Dodd-Frank, however, seemingly left the industry securely in state regulators’ hands, where it had been for well over a century. Although one of Dodd-Frank’s sixteen titles is devoted to insurance, that title creates a Federal Insurance Office (FIO) with a comparatively narrow mandate.
    Keywords: Dodd-Frank, Federal Insurance Office, Financial Stability Oversight Council, systemic designation, insurance regulation
    Date: 2015–03
  3. By: Cecilia Dassatti (Banco Central del Uruguay); Natalia Mariño (Banco Central del Uruguay)
    Abstract: The aim of this study is to give a diagnose of the current Pension System from a 30-year forecast of its main variables. As a result, we quantify the effect of the System’s maturity on the balance sheet of Banco de Seguros del Estado (currently the only insurance company in charge of the payment of retirement pensions). The relevance of this analysis is based on the proximity of the moment when the number of annuities from the New Pension System increases significantly and the need for a deeper analysis of the current regulatory design
    Abstract: El objetivo de este trabajo es hacer un diagnóstico del Sistema Previsional en base a una proyección de las principales variables del Sistema para un horizonte de 30 años. Como resultado, se obtiene una medida del impacto de la maduración del Sistema sobre el balance del Banco de Seguros del Estado (actualmente la única empresa aseguradora encargada del pago de prestaciones jubilatorias). La relevancia del análisis se justifica en la medida en que se aproxima el momento en el cual el número de jubilados por el sistema mixto aumente significativamente, razón por la cual es pertinente analizar el diseño regulatorio actual.
    Keywords: Pension System, AFAP, Insurance Company, interest rate, mortality table; Sistema Previsional, AFAP, Empresa Aseguradora, tasa de interés técnica, tabla de mortalidad
    JEL: C18 C82 E23 E24 J21 L16 L70
    Date: 2014
  4. By: Pietro Tebaldi (Stanford University)
    Abstract: This paper develops and estimates a model of a regulated health insurance exchange, in which insurers’ ability to adjust prices across buyers with different observed risk or preferences is restricted. I show conditions under which the joint distribution of risk and preferences is identified, even when the econometrician does not observe any information on individual risk. These primitives can then be used to simulate equilibrium under alternative regulations. I estimate the model with data from the first year of the Californian exchange under the Affordable Care Act, where age-rating restrictions and a subsidy program determine the way in which insurers’ decisions translate to expected profits. For this market, I investigate alternative designs of the subsidy program. Compared to the subsidy formula mandated by the healthcare reform, the adoption of a voucher program – providing buyers with a lump-sum equal to 70-80% of their expected expenditure – would transfer welfare away from insurers, favoring consumers and/or taxpayers. Simulations of equilibrium under this alternative policy result in total coverage between 100-115% of the levels achieved by the current regulations, while also reducing government expenditure, average premiums, and markups, by 0-20%, 12-15%, and 22-27%, respectively.
    Keywords: Health insurance, health reform, ACA, health exchanges, subsidies, regulation.
    JEL: I11 I13 I18 L51 H51 L88
    Date: 2015–06

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