nep-ias New Economics Papers
on Insurance Economics
Issue of 2016‒06‒04
fourteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Implication of 2014 Farm Policies for Wheat Production By Luckstead, Jeff; Devadoss, Stephen
  2. U.S. Farmers’ Insurance Choices under Expected Utility Theory and Cumulative Prospect Theory By Bulut, Harun
  3. The Effect of Crop Insurance Premium Subsidies on Soybean Producers' Risk Management Portfolios By Hungerford, Ashley; Rosch, Stephanie
  4. Estimating Effects of Health Insurance Coverage on Medical Service Utilization and Health in Rural China By Yiqiu, Wang; Maria, Porter; Songqing, Jin
  5. Medicare Advantage 2016 Spotlight: Enrollment Market Update By Gretchen Jacobson; Giselle Casillas; Anthony Damico; Tricia Neuman; Marsha Gold
  6. Farmer response to crop insurance incentives under heterogeneous risk-management strategies By Heerman, Kari E.R.; Cooper, Joseph; Johansson, Robert; Worth, Thomas
  7. Dairy Cattle Insurance Will Change Dairy Farmers' Anti-risk Inputs? By Zhao, Yuanfeng; Zhang, Xuguang
  8. On the Demand for Federal Crop Insurance By Wang, Yang; Annan, Francis
  9. Estimating the Effect of Crop Insurance on Input Use When Insured Farmers are Monitored By He, Juan; Zheng, Xiaoyong; Rejesus, Roderick; Yorobe, Jose Jr
  10. Getting Older and Riskier: The Effect of Medicare on Household Portfolio Choices By Marco Angrisani; Vincenzo Atella; Marianna Brunetti
  11. Insurance Companies and the Role of the Federal Reserve : a speech at the National Association of Insurance Commissioner’s International Insurance Forum, Washington, D.C., May 20, 2016. By Tarullo, Daniel K.
  12. Strengthening City Disaster Risk Financing in Viet Nam By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  13. Evaluation of Health Care Innovation Awards (HCIA): Primary Care Redesign Programs, Second Annual Report, Volume II: Individual Program Summaries By Linda Barterian; Keith Kranker; Rumin Sarwar; Boyd Gilman; Greg Peterson; Catherine DesRoches; Sandi Nelson; Laura Blue; Kate Stewart; Frank Yoon; Lorenzo Moreno
  14. Eliciting Demand for Flood Insurance under Climate Change: A Choice Experiment Approach By Lyu, Ya-Pin; Chang, Ching-Cheng; Chen, Shu-Ling

  1. By: Luckstead, Jeff; Devadoss, Stephen
    Abstract: We develop a model to comprehensively analyze the effects of 2014 Farm Bill wheat policies---loan deficiency payments (LDP), price loss coverage (PLC), agriculture risk coverage-county (ARC-CO), individual revenue protection crop insurance (RP), and supplemental coverage option (SCO)---on input use, yield, certainty equivalent, optimal RP insurance coverage level, expected payments, and premiums. The comparative static results show the directional impact of the coupling, wealth, and insurance effects for each policy. We calibrate the model to a representative dryland wheat farm in Kansas. The simulation results show that the expected LDP payment is zero for 2014, RP causes input use and yield to decline, and ARC-CO, PLC, and SCO result in higher input use and yield. Thus, both the theoretical and empirical results provide evidence of moral hazard associated with RP and SCO insurance. If the farmer selects only RP insurance, then the optimal coverage level is 85%, but drop to 50% if SCO is added. Based on certainty equivalent analysis, the optimal policy combination is RP with ARC-CO. The results also provide evidence that farmers would opt for crop insurance programs even without premium subsidies.
    Keywords: Coupling, Wealth, and Insurance Effects, Farm Bill, Moral Hazard, Wheat, Agricultural and Food Policy, Q18, Q12, D24,
    Date: 2016
  2. By: Bulut, Harun
    Abstract: Towards explaining regional differences in U.S. farmers’ crop insurance choices, we propose a budget heuristic effect within the standard Expected Utility Theory (EUT) framework and conduct theoretical and simulation analyses. We also disentangle the effects of various aspects the cumulative prospect theory (CPT) framework in a separate simulation analysis.
    Keywords: agricultural (crop and livestock) insurance, cumulative prospect theory, budget heuristics, mental accounting, Agricultural and Food Policy, Agricultural Finance, Crop Production/Industries, Demand and Price Analysis, Farm Management, Institutional and Behavioral Economics, Marketing, Production Economics, Public Economics, Research Methods/ Statistical Methods, Risk and Uncertainty, D81, D82, G22, G28, Q12, Q18,
    Date: 2016–05–25
  3. By: Hungerford, Ashley; Rosch, Stephanie
    Abstract: We examine how reducing subsidies for federal crop insurance affects the risk management portfolios of US soybean producers. We apply the portfolio optimization approach of Das and Statman \citeyearpar{das2013options} to model how producers’ risk management portfolios change as subsidies for federal crop insurance premiums change, and examine how the changes to the risk management portfolios impact farmers’ on-farm income and exposure to downside risk. We optimize farmers’ risk management portfolio by adjusting the budget shares dedicated to each of four risk management tools: returns on production, forward contracting, savings, and crop insurance.
    Keywords: crop insurance, soybeans, risk management, agricultural finance, Agricultural and Food Policy, Agricultural Finance, Farm Management, Risk and Uncertainty, Q14, Q18,
    Date: 2016
  4. By: Yiqiu, Wang; Maria, Porter; Songqing, Jin
    Abstract: This research estimates the impact of the New Cooperative Medical Scheme (NCMS), a public health insurance program in rural China, on health service use, healthcare costs, and health outcomes. Using difference-in-difference and propensity score matching methods, we address county and household selection bias with panel data from the China Health and Nutrition Survey. By comparing various methods used in prior studies of NCMS to define treatment and comparison groups, we find evidence of county selection bias. Taking a new sampling approach after controlling for county selection issues, we find that while NCMS does not improve health, use of both preventive services and township hospitals increases, as do costs for treating the common cold. In particular, we find that relatively vulnerable households – those with lower incomes and older members participating in NCMS–travel greater distances to access healthcare services, incurring higher travel and treatment costs, yet with no measurable health benefits.
    Keywords: China, Health insurance, Medical service utilization, Health, Health Economics and Policy,
    Date: 2016–05
  5. By: Gretchen Jacobson; Giselle Casillas; Anthony Damico; Tricia Neuman; Marsha Gold
    Abstract: The number and share of Medicare beneficiaries enrolled in Medicare Advantage has steadily climbed over the past decade, and this trend in enrollment growth is continuing in 2016.
    Keywords: Medicare Advantage, Enrollment, Premiums, Medicare Part D, Quality Measures
    JEL: I
  6. By: Heerman, Kari E.R.; Cooper, Joseph; Johansson, Robert; Worth, Thomas
    Abstract: Understanding how farmers respond to premium subsidies and other incentives to purchase crop insurance is fundamental to evaluating how changes in these incentives affect the use of federal crop insurance and thus the Federal savings that can be expected. We use contract-level data for corn enterprise units in 2008 and 2009 to examine how modifications to the out-of-pocket cost of crop insurance affect farmers’ insurance coverage level decisions and government expenditures. Unlike previous studies that have examined this question, we use a specialized discrete choice framework, an ordered generalized extreme value (OGEV) model. This approach explicitly accounts for the natural ordering of the choice set from low to high coverage. Our results suggest a significant difference in the response to changes in the unit price of federal crop insurance for farmers that are observed to choose a low coverage level versus those that are observed to choose a high coverage level. This has significant implications for the potential government cost savings and change in average farmer coverage level that can be expected from a change in the structure of premium subsidies.
    Keywords: crop insurance, premium subsidies, discrete choice, generalized extreme value, ordered alternatives, Agricultural and Food Policy, Demand and Price Analysis, Q18,
    Date: 2016
  7. By: Zhao, Yuanfeng; Zhang, Xuguang
    Abstract: A major problem facing dairy farmers is production risk, and dairy cattle insurance is one alternative for reducing this risk. The primary objective of this paper is to test the effects of dairy cattle insurance on farmers’ anti-risk inputs. Based on the survey data of dairy farmers in 2015, this paper selects the main area of dairy farming in China-the Inner Mongolia Autonomous Region as the study area, using treatment-effects model for empirical test and analysis. The findings indicates that the existing dairy cattle insurance policies in China do not have a significant effect on farmers’ anti-risk inputs. Due to the low insurance payments and the narrow insurance coverage for the death of dairy cattle, the farmers who participate in dairy cattle insurance, will not weaken their health management measures for dairy cattle, and they do not have negative anti-risk behaviors in the process of dairy production.
    Keywords: Dairy farming, Dairy cattle insurance, Anti-risk inputs, Moral hazard, Agricultural Finance,
    Date: 2016
  8. By: Wang, Yang; Annan, Francis
    Abstract: There are ongoing policy debates about why the Federal government subsidizes crop insurance, which effectively rests on our understanding of the market context of insurance demand. There is mounting empirical evidence about how price sensitive producers in the United States are to participating in crop insurance, generally suggesting a wide range of elasticities. Research challenges remain, however, and the existing evidence is relatively outdated. Most of these studies fail to address the endogenity of insurance premiums. We address these challenges and attempt to provide well-identified elasticity estimates that reflect current state of the world of the Federal crop insurance program, using a variety of methods. We explore the fraction of planted acreage insured as our main outcome of interest. Our preferred model which exploits exogenous variations from major Federal subsidy policy changes provides a demand elasticity of -0.79. The results are crucial for ongoing debates and have important policy implications for the Federal crop insurance program.
    Keywords: demand elasticity, Federal crop insurance program, endogenity, Risk and Uncertainty,
    Date: 2016–05–16
  9. By: He, Juan; Zheng, Xiaoyong; Rejesus, Roderick; Yorobe, Jose Jr
    Keywords: Crop Insurance, Monitoring, Moral Hazard, Crop Production/Industries, Food Security and Poverty, Industrial Organization, Risk and Uncertainty,
    Date: 2016–05–14
  10. By: Marco Angrisani (CESR, University of Southern California); Vincenzo Atella (CEIS,University of Rome "Tor Vergata"); Marianna Brunetti (DEF and CEIS, Università di Roma "Tor Vergata" and CeFin)
    Abstract: The rise of health-care costs has become an increasingly important contributor to financial risk for households. To the extent that these costs can be large, unpredictable, and not fully insured, they represent a source of background risk that could potentially deter households’ financial risk taking. Using longitudinal data from the Health and Retirement Study over the period 1992-2012, we adopt a fixed-effects estimation strategy to empirically test whether universal health insurance, such as the one provided by Medicare to over-65 Americans, acts as a shelter against this background risk and, in turn, promotes household stock holding. We find that households in poor health status, who face a higher risk of large medical expenses, are significantly less likely to hold stocks than their healthier counterparts. Yet, this gap is, for the most part, eliminated by Medicare eligibility. Notably, this offsetting effect is primarily experienced by households without private health insurance over the observation period. Our results are robust to several sample selections and model specifications.
    Keywords: Household portfolios; Health status; Medicare; Health insurance
    JEL: D14 I13 G11
    Date: 2016–05–31
  11. By: Tarullo, Daniel K. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2016–05–20
  12. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB)
    Abstract: Disaster risk financing instruments provide funding for disaster relief, early recovery, and reconstruction. Adequate financing arrangements are essential in ensuring timely recovery in the wake of disasters and in minimizing their impact on socioeconomic development. This paper presents a summary of a technical assistance project on the development of disaster risk financing solutions for the cities of Can Tho and Hue and, by extension, for other cities in Viet Nam. Many of Viet Nam’s cities face significant risk from natural hazards such as typhoons, flooding, landslide, and drought. The project included the development of disaster risk models, financing gap analysis, and review of legislative and regulatory considerations. Disaster risk financing solutions were identified, focusing on insurance, credit, and capital market instruments.
    Keywords: can tho, hue, viet nam, vietnam, disaster risk financing, insurance, natural hazard, typhoon, flood, disaster, reconstruction, japan fund for poverty reduction, jfpr
    Date: 2015–11
  13. By: Linda Barterian; Keith Kranker; Rumin Sarwar; Boyd Gilman; Greg Peterson; Catherine DesRoches; Sandi Nelson; Laura Blue; Kate Stewart; Frank Yoon; Lorenzo Moreno
    Keywords: Primary Care Redesign, Implementation Evaluation, Impact Evaluation, Delivery Systems Innovation, Clinician Behavior, Workforce Development, Medicare, Medicaid
    JEL: I
  14. By: Lyu, Ya-Pin; Chang, Ching-Cheng; Chen, Shu-Ling
    Abstract: The purpose of this study is to unveil the nature of individual’s preference for PPP flood insurance alternatives under climate change using the choice experiment method and a case study in Tainan City in Taiwan. Our estimates shows that respondents who perceived increasingly higher risks in agriculture and fishery industry were less likely to buy flood insurance. Several reasons could account for their inactiveness in insurance purchase, including insufficient knowledge and financial capacity, over-reliance on government relief, and the lack of diverse insurance alternatives to meet local industrial needs. The simulated market penetration under different climate scenarios also reveals the market potentials do exist and will grow in the future while climate conditions get worse.
    Keywords: Private-Public-Participation, Flood Insurance, Choice Experiment, Market Penetration, Risk Perception, Demand and Price Analysis, Financial Economics, Institutional and Behavioral Economics, Risk and Uncertainty, Q54, Q58, G22, G32,
    Date: 2016–05

This nep-ias issue is ©2016 by Soumitra K. Mallick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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