nep-ias New Economics Papers
on Insurance Economics
Issue of 2016‒01‒03
fourteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Social Health Insurance: A Quantitative Exploration By Juergen Jung; Chung Tran
  2. The demand for health microinsurance services: assessment of the contribution effort using microeconomic data By El Aida, Kawtar; El Kadiri, Mounir; Mourji, Fouzi
  3. Voluntary Contributions to a Mutual Insurance Pool By Louis Lévy-Garboua; Claude Montmarquette; Jonathan Vaksmann; Marie Claire Villeval
  4. Insurance activities and systemic risk By Berdin, Elia; Sottocornolay, Matteo
  5. Disability Benefit Generosity and Labor Force Withdrawal By Mullen, Kathleen; Staubli, Stefan
  6. Longevity Risk Transfer activities by European insurers and pension funds By Patty Duijm
  7. Assessing Internal Controls among Insurance companies in Ghana By Amponsah, Stephen; Adu, Kofi Osei; Amissah, Anthony
  8. Do Extrinsically Motivated Mental Health Care Providers Have Better Treatment Outcomes? By Rudy Douven; Minke Remmerswaal; Robin Zoutenbier
  9. Quality Reporting on Medicare's Compare Sites: Lessons Learned from Consumer Research, 2001-2014 By Margaret Gerteis; Cicely Thomas; Lauren Blatt; Sally Crelia; Alyson Marano Ward; Kelly Moriarty; Monica Sarmiento; Myra Tanamor; Russ Tisinger
  10. The impact of access to health facilities on maternal care use and health status: Evidence from longitudinal data from rural Uganda By Fredrick Manang; Chikako Yamauchi
  11. Evolution of Outreach: Evaluation of Enroll America's Efforts to Support ACA Enrollment By Sheila Hoag; Cara Orfield; Sean Orzol
  12. A Critical Analysis of Purchasing of Health Services in the Philippines: A Case Study of PhilHealth By Picazo, Oscar F.; Ho, Beverly Lorraine C.; Ulep, Valerie Gilbert T.; Pantig, Ida Marie T.
  13. Is there heterogeneity in the response of consumption to income shocks? By Ludwig, Johannes
  14. Suivi de la collecte et des placements des 12 principaux assureurs-vie à fin juin 2015. By Bontemps-Chanel A.-L.; Lebrère A.; Malgras F.

  1. By: Juergen Jung; Chung Tran
    Abstract: We quantify the welfare implications of three alternative approaches to providing social health insurance: (i) a mix of private and public health insurance (US-style), (ii) compulsory universal public health insurance (UPHI), and (iii) private health insurance for workers combined with government subsidies and price regulation. We use a Bewley-Grossman lifecycle model calibrated to match the lifecycle structure of earnings and health risks in the US. For all three systems we find that welfare gains triggered by a combination of improvements in risk sharing and wealth redistribution dominate welfare losses caused by tax distortions and ex-post moral hazard effects. Overall, the UPHI system outperforms the other two systems in terms of welfare gains if the coinsurance rate is properly designed. A switch from the US system to a well-designed UPHI system results in large welfare gains. However, such a radical reform faces political impediments due to opposing welfare effects across different income groups.
    Keywords: Health capital, lifecycle health risk, incomplete insurance markets, social insurance, optimal policy, dynamic general equilibrium with idiosyncratic shocks
    JEL: I13 D52 E62 H31
    Date: 2015–12
  2. By: El Aida, Kawtar; El Kadiri, Mounir; Mourji, Fouzi
    Abstract: This paper analyzes subscription and willingness to pay (WTP) effort decisions among microcredit clients for a health microinsurance service in Morocco. We use data from a survey conducted among 562 microcredit clients belonging to two instututions. To estimate clients WTPs’ efforts, we choose the contingent valuation method. We analyze the different steps of decision by using simple and generalized Tobit. The results highlight the effect of socio-economic and financial variables including clients’ participation in formal and informal insurance mechanisms. We explain that they think in terms of substitution in one case, and complementarity in the other. The effect of savings reveals that clients want to maximize the collective utility of their households.
    Keywords: health microinsurance, contingent valuation, Tobit, willingness to pay
    JEL: C34 I11 I13 Q51
    Date: 2015–02–06
  3. By: Louis Lévy-Garboua (Université Paris 1-Panthéon Sorbonne, Paris School of Economics, Centre d'Economie de la Sorbonne, 106-112 Bd de l'Hôpital, 75647 Paris Cedex 13, France; and CIRANO, Montréal, Canada); Claude Montmarquette (CIRANO and Université de Montréal, 2020 rue University, Montréal, (Québec), Canada, H3A 2A5); Jonathan Vaksmann (GAINS-TEPP, Université du Maine, Faculté de Droit et des Sciences Economiques Avenue O.Messiaen, 72085 Le Mans Cedex 9; and Centre d'Economie de la Sorbonne, Université Paris 1-Panthéon Sorbonne); Marie Claire Villeval (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; Université Lyon 2, Lyon, F-69007, France)
    Abstract: We study mutual-aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution-based coverage. The equal coverage mechanism leads to a unique no-insurance equilibrium while contribution-based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a "dual interior equilibrium". That dual equilibrium is consistent with the co-existence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a significant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.
    Keywords: Mutual insurance pool, voluntary contribution mechanism, equal coverage, contribution-based coverage, heterogeneity of risk attitudes, experiment
    JEL: I18 H21 H41 C72 C91
    Date: 2015
  4. By: Berdin, Elia; Sottocornolay, Matteo
    Abstract: This paper investigates systemic risk in the insurance industry. We first analyze the systemic contribution of the insurance industry vis-a-vis other industries by applying 3 measures, namely the linear Granger causality test, conditional value at risk and marginal expected shortfall, on 3 groups, namely banks, insurers and non-financial companies listed in Europe over the last 14 years. We then analyze the determinants of the systemic risk contribution within the insurance industry by using balance sheet level data in a broader sample. Our evidence suggests that i) the insurance industry shows a persistent systemic relevance over time and plays a subordinate role in causing systemic risk compared to banks, and that ii) within the industry, those insurers which engage more in non-insurance-related activities tend to pose more systemic risk. In addition, we are among the first to provide empirical evidence on the role of diversification as potential determinant of systemic risk in the insurance industry. Finally, we confirm that size is also a significant driver of systemic risk, whereas price-to-book ratio and leverage display counterintuitive results.
    Keywords: Systemic Risk,Insurance Activities,Systemically Important Financial Institutions
    JEL: G01 G22 G28 G32
    Date: 2015
  5. By: Mullen, Kathleen (RAND); Staubli, Stefan (University of Calgary)
    Abstract: A key component for estimating the optimal size and structure of disability insurance (DI) programs is the elasticity of DI claiming with respect to benefit generosity. Yet, in many countries, including the United States, all workers face identical benefit schedules, which are a function of one's labor market history, making it difficult to separate the effect of the benefit level from the effect of unobserved preferences for work on individuals' claiming decisions. To circumvent this problem, we exploit exogenous variation in DI benefits in Austria arising from several reforms to its DI and old age pension system in the 1990s and 2000s. We use comprehensive administrative social security records data on the universe of Austrian workers to compute benefit levels under six different regimes, allowing us to identify and precisely estimate the elasticity of DI claiming with respect to benefit generosity. We find that, over this time period, a one percent increase in potential DI benefits was associated with a 1.2 percent increase in DI claiming.
    Keywords: disability insurance, benefit generosity, labor force withdrawal, claiming elasticity
    JEL: H55 J14 J22
    Date: 2015–12
  6. By: Patty Duijm
    Abstract: Longevity risk, the risk that people live longer than expected, can have 7 a significant financial effect on pension funds and insurance companies. To manage this risk, these parties can transfer such risks to other parties, such as (re)insurers, investment banks and capital markets. In this study, Longevity Risk Transfer (LRT) activities are defined as those activities where financial instruments are used to transfer longevity risk to third parties. This study presents the initial results of a survey on LRT activities by European insurance companies and pension funds and aims to better understand the developments in this market and the related risks. In total, 26 countries participated in this questionnaire. The outcomes show that the market for LRT products has grown rapidly, but is still concentrated in just a few countries. LRT activities are most developed in countries with private Defined Benefit (DB) pension schemes. Countries that mainly have state pensions have less LRT activities as governments do not tend to transfer longevity risk in this manner. From a policy perspective, attention should be given to where the longevity risk is transferred to. Especially in a growing market monitoring of the holders of longevity risk is important as (i) LRT deals between banks, (re)insurers etc. could lead to increased interconnectedness and hence to more contagion during times of stress and; (ii) further growth in the market for LRT instruments could lead to a build-up of large tail risk exposure (e.g. in case of a cure for cancer).
    Date: 2015–10
  7. By: Amponsah, Stephen; Adu, Kofi Osei; Amissah, Anthony
    Abstract: This study assessed the internal controls system in the insurance companies in Ghana. Data were collected from internal auditors in the insurance industry in Ghana and in total, 91 questionnaires were successfully administered. The study employed multivariate analysis of variance (MANOVA) as the analytical tool.There was a statistically significant difference among categories of insurance companies on the combined dependent variables (internal control variables-Control Activities, Monitoring, Information and Communication, Control Environment, and Risk Analysis). When the results for the dependent variables were considered separately, the variables that contributed to the statistical significance are the Control Activities, Monitoring, Control Environment and Risk Analysis.The study recommended that National Insurance Commission should organise seminar on effective implementation of internal controls for the insurance companies in Ghana with much focus on brokerage reinsurance, reinsurance and lost adjusters companies.
    Keywords: Internal Control Variables, Categories of insurance companies and MANOVA
    JEL: M1 M2
    Date: 2015–12–25
  8. By: Rudy Douven; Minke Remmerswaal; Robin Zoutenbier
    Abstract: This study compares different responses to financial incentives between self-employed providers in Dutch mental health care. We find that these different responses are related to differences in treatment duration and treatment outcome. In 2008, a new compensation scheme was introduced for self-employed mental health care providers in the Netherlands. The compensation that self-employed psychologists and psychiatrists received for each patient is based on the total treatment duration. The compensation increases step-wise after 800, 1800 and 3000 minutes of treatment with a large amount. It therefore provides strong financial incentives for providers to prolong their treatment till just after the threshold. Using a large administrative dataset, we exploit these different responses by providers to separate more extrinsically from non-extrinsically motivated providers. We find that the majority of the providers are, to some degree, extrinsically motivated and strategically set treatment duration to exploit the thresholds in the compensation scheme. Some providers choose to end all treatments at 800, 1800 or 3000 minutes, most providers choose to occasionally set the treatment duration strategically and some providers do not take the thresholds into account at all. Next, we study total treatment duration and treatment outcomes of all providers. Treatment outcome is measured with the increase of the GAF score of patients (the Global Assessment of Functioning is a subjective assessment by the provider regarding the mental well-being of the patient and the patient's functioning in daily life). We find that non-extrinsically motivated providers, who do not strategically set treatment duration, treat mental health patients shorter, receive less compensation and report better treatment outcomes, as measured by the improvement in GAF score. This suggests that the compensation scheme rewards inefficient or low quality providers.
    JEL: H51 I11 J22 M52
    Date: 2015–12
  9. By: Margaret Gerteis; Cicely Thomas; Lauren Blatt; Sally Crelia; Alyson Marano Ward; Kelly Moriarty; Monica Sarmiento; Myra Tanamor; Russ Tisinger
    Abstract: This report synthesizes findings from consumer research on Medicare’s Compare sites that Mathematica Policy Research and L&M Policy Research conducted under multiple contracts with the Centers for Medicare & Medicaid Services (CMS) from 2001 through 2014.
    Keywords: consumer engagement, quality measurement and reporting
    JEL: I
    Date: 2015–12–14
  10. By: Fredrick Manang (National Graduate Institute for Policy Studies); Chikako Yamauchi (National Graduate Institute for Policy Studies)
    Abstract: Maternal and child mortality remains high in developing countries. While timely antenatal care and delivery at formal facility are recommended, many mothers do not use them. This paper investigates whether newly established health facilities affect maternal health care utilization as well as the health of mothers and children. In order to deal with possibly endogenous facility placement, we apply the community-level and mother-level fixed effects models to the new, decade-long panel data from rural Uganda. Results demonstrate differential roles played by large facilities and small clinics. Openings of large facilities increase the probability of delivery at formal facility, attended by trained personnel. This is accompanied by an increased use of inexpensive transportation modes such as walking and own bicycle to delivery places. Weak evidence is also found for reduced degree of selective infant survival. New community-level clinics, on the other hand, increase regular antenatal care usage and reduce complications during delivery. These results suggest that accessible clinics help pregnant mothers to avoid preventable problems through early diagnosis of risky cases and/or treatment of existing diseases. Overall, these findings underscore the importance of providing good access to health facilities, in particular to community-level clinics, in order to promote the utilization of maternal care and improve maternal and infant health.
    Date: 2015–12
  11. By: Sheila Hoag; Cara Orfield; Sean Orzol
    Abstract: Mathematica Policy Research examined the implementation of Enroll America’s field outreach campaign during the second open enrollment period, to understand whether and how it adapted the campaign compared to its first year activities, to assess second-year performance, and to document Enroll America’s expectations for their work in 2015 and beyond.
    Keywords: Enroll America, Affordable Care Act, open enrollment, second open enrollment period, enrollment assistance, outreach and education about coverage
    JEL: I
    Date: 2015–11–20
  12. By: Picazo, Oscar F.; Ho, Beverly Lorraine C.; Ulep, Valerie Gilbert T.; Pantig, Ida Marie T.
    Abstract: This study is a critical analysis of health services purchasing undertaken by the PhilHealth, which implements the National Health Insurance Program of the Philippines. Purchasing is about how an institution should determine, negotiate for, and obtain health services on behalf of a group of people that has contributed resources, either through taxes, premiums, or point-of-service payments, in exchange for anticipated health services. The study employs a principal/agent framework for analyzing three critical relationships: that between the purchaser and health-care providers, between the purchaser and citizens (or members of Philhealth), and between the purchaser and the government, both as regulator and as funder of services, at the national government and local government levels. The study is an analysis of the key alignments and variances of purchasing practices vis-a-vis the "design" and the theoretical ideal in each of the three relationships. To do this, the study employs an extensive document review as well as key informant interviews of decisionmakers and other stakeholders, including PhilHealth management and staff, the Department of Health, provider representatives, and consumer representatives. It is part of a multicountry analysis of purchasing of health services in selected African and Asian health-financing organizations. It also provides key findings and policy implications.
    Keywords: Philippines, PhilHealth, purchasing of health services, strategic purchasing, active purchasing, health-care financing
    Date: 2015
  13. By: Ludwig, Johannes
    Abstract: While recently more and more research has focused on the aggregate response of consumption to income shocks, little is known about how this response differs for households at different ends of the income distribution. This paper investigates how consumption reacts to transitory and permanent shocks to disposable income for households with an income above or below the median. Panel data on income and consumption from the PSID between 1998 and 2012 is used to estimate consumption insurance parameters. Although households below the median are found to be exposed to larger transitory and permanent income shocks, they can buffer permanent shocks to income significantly better compared to households above the median. The latter, though, are better insured against transitory income shocks. In general, the poorer households are, the more similarly they react to the two kinds of income shocks.
    Abstract: Während sich viele Studien mit der durchschnittlichen Reaktion des Konsums auf Einkommensschocks befassen, ist wenig darüber bekannt, ob und wie sich diese Reaktion für Haushalte unterscheidet, die sich an unterschiedlichen Positionen in der Einkommensverteilung befinden. Diese Arbeit untersucht, wie Haushalte oberhalb und unterhalb des Medians ihren Konsum nach transitorischen und permanenten Schocks des verfügbaren Einkommens anpassen. Paneldaten des PSID zu Einkommen und Konsum für die Jahre von 1998 bis 2012 werden verwendet, um Konsumversicherungsparameter zu schätzen. Obwohl Haushalte unterhalb des Medians größeren transitorischen und permanenten Einkommensschocks ausgesetzt sind, gelingt es ihnen signifikant besser als Haushalten oberhalb des Medians, permanente Schocks abzufedern. Letztere sind aber besser in der Lage, transitorische Einkommensschocks zu bewältigen. Insgesamt zeigt sich, dass Haushalte umso ähnlicher auf beide Arten von Einkommensschocks reagieren, je ärmer sie sind.
    Keywords: consumption response to income shocks,consumption insurance
    JEL: D12 D31 E21
    Date: 2015
  14. By: Bontemps-Chanel A.-L.; Lebrère A.; Malgras F.
    Abstract: Les douze principaux organismes d’assurance vie1 ont enregistré une collecte nette de 2,2 milliards d’euros au deuxième trimestre 2015, portée comme au premier trimestre par une collecte brute particulièrement dynamique. Les contrats en unités de compte (UC) continuent à être privilégiés par les assurés, même si la baisse de la collecte nette observée entre le premier et le deuxième trimestre 2015 est plus importante pour ce type de contrat en raison de la hausse des prestations et rachats sur ces supports et que le phénomène d’arbitrage des contrats en UC vers les supports en euros se renforce. Cette bonne tenue de la collecte contraste avec la faible progression des encours de placements des organismes d’assurance qui n’ont progressé que de 0,6% par rapport au trimestre précédent (pour s’établir à 1 374 milliards d’euros). En stock comme en flux, les investissements obligataires restent les placements privilégiés des assureurs, qui représentent près de la moitié du flux total, lui-même en net repli (de +24,2 milliards d’euros au 1er trimestre à +10,9 milliards d’euros au deuxième). Fait nouveau après deux années de progression ininterrompue, le stock de plus-values latentes des douze principaux assureurs-vie français s’est fortement dégradé au cours du trimestre. Cette baisse de 28% sur trois mois coïncide avec le retournement à la hausse des taux obligataires et la baisse des indices actions. Les plus-values réalisées, quant à elles, atteignent 1,8 milliards d’euros au deuxième trimestre, après avoir atteint un montant record au premier trimestre (à 2,3 milliards d’euros). Ces effets de valorisation induisent un repli des placements en titres souverains de l’Union européenne, dont la valeur de réalisation a diminué de plus de 32 milliards d’euros au deuxième trimestre. Les titres français contribuent aux deux tiers à cette baisse, comme ils avaient contribué aux deux tiers de la hausse enregistrée le trimestre dernier. De même, les titres italiens et espagnols contribuent à cette baisse en proportion approximative de leurs encours respectifs (resp. à hauteur de 11% et de moins de 5% à la baisse constatée). Ces évolutions ont ainsi peu d’impact sur la structure par pays des placements en titres souverains de l’Union européenne, qui reste stable au cours du temps, avec un poids des titres souverains français qui se maintient à 65% de l’ensemble des placements obligataires souverains. Enfin, malgré une chute record de près de 23% du taux de plus-values latentes sur les titres bancaires détenus par les 12 principaux assureurs, la tendance à la hausse de l’exposition des assureurs au secteur bancaire constatée au premier trimestre se confirme.
    Keywords: assurance vie, collecte, placements.
    JEL: G22
    Date: 2015

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