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on Insurance Economics |
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Issue of 2016‒06‒14
fourteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Driedger, Jonathon; Porth, Lysa; Boyd, Milton |
| Abstract: | Crop insurers have limited ability to manage the risk of losses once premiums are set and farmers have taken out their policies. Any additional instruments that enhance the ability for insurers to reduce their risk between when premiums are set and final yields are determined can help manage potential losses. The relationship between crop insurance losses and changes in futures prices are examined, and whether there is the potential to hedge crop insurance losses with grain futures contracts. |
| Keywords: | crop insurance, hedging, futures contracts, Agricultural Finance, Risk and Uncertainty, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235747&r=ias |
| By: | Xu, Chang; Miranda, Mario |
| Abstract: | Recent research has proposed combining index insurance with informal group risk sharing to overcome the individual shortcomings of informal risk sharing and index insurance. If this complimentary relationship holds universally, it can potentially: 1. alleviate the low take-up rate puzzle faced by index insurance pilot programs; 2. improve the sustainability of informal risk sharing in the case of aggregate shocks. We specifically investigated the hypothesis that the availability of indemnity payment from index insurance will increase the involvement in informal risk sharing. We utilized the Index-Based Livelihood Insurance program piloted on pastoralists in Kenya and use the data provided by the International Livestock Research Institute. We found that, except for receiving cash, having received index insurance indemnity significantly increases the tendency to receive cash, receive in-kind transfer and give in-kind transfer as a gift from/to any other households. |
| Keywords: | index insurance, informal risk sharing, Kenya, drought, basis risks, Agricultural Finance, Crop Production/Industries, International Development, Livestock Production/Industries, Risk and Uncertainty, D81, O16, O 17, |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236052&r=ias |
| By: | Dougherty, John; Miranda, Mario |
| Abstract: | Previous literature suggests that weather based index insurance has the potential to greatly benefit poor rural households that are exposed to significant sources of systemic risk. This study proposes a simple model of how providing index insurance may reduce moral hazard problems inherent in microfinance contracts. Through increasing the value of the dynamic incentive of repayment, the model demonstrates that providing index insurance can increase endogenous effort choice, particularly for joint liability loans, provided that insurance premiums are sufficiently low. |
| Keywords: | Microfinance, Index Insurance, Moral Hazard, Endogenous Effort, Agricultural and Food Policy, International Development, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236217&r=ias |
| By: | Valérie Paris; Emily Hewlett; Ane Auraaen; Jan Alexa; Lisa Simon |
| Abstract: | This paper provides a detailed description of health coverage in OECD countries in 2012. It includes information on the organisation of health coverage (residence-based vs contributory systems), on the range of benefits covered by basic health coverage and on cost-sharing requirements. It also describes policies implemented to ensure universal health coverage –in most countries- and to limit user charges for vulnerable populations or people exposed to high health spending. The paper then describes the role played by voluntary health insurance as a secondary source of coverage. Combining qualitative information collected through a survey of OECD countries on benefits covered and cost-sharing requirements with spending data collected through the system of health accounts for 2012, this paper provides valuable information on health care coverage in OECD countries at a time universal health coverage is high on the policy agenda of many countries. Ce document fournit une description détaillée de la couverture santé dans les pays de l’OCDE en 2012. Il contient des informations sur l’organisation de la couverture santé (selon que les droits sont contributifs ou accordé à tout résident), sur l’étendue des services couverts par le régime de base et sur les contributions aux frais demandés aux usagers. Il décrit également les politiques introduites pour atteindre la couverture universelle- dans la plupart des pays ou pour les limiter les dépenses pour les usagers vulnérables ou exposés à des dépenses élevées. Ce document décrit ensuite le rôle joué par l’assurance privée volontaire en tant que source « secondaire » de couverture santé. Combinant l’information qualitative recueillie sur les services couverts et dépenses laissées à la charge des usagers lors d’une enquête menée auprès des pays de l’OCDE et les données sur les dépenses recueillies à travers les comptes de la santé, ce document fournit une information précieuse sur la couverture santé dans les pays de l’OCDE à un moment où la couverture santé universelle est une priorité politique dans de nombreux pays. |
| JEL: | I13 I18 |
| Date: | 2016–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaad:88-en&r=ias |
| By: | Motamed, Mesbah; O'Donoghue, Erik |
| Abstract: | The natural hedge is a familiar concept in the agricultural risk literature, but little work has formally examined its size and effect on producer outcomes. In this paper, we systematically measure the impact of the natural hedge on revenue stability over the period 1960-2014. We also test its effect on present-day insurance uptake decisions. As part of the analysis, we propose an alternative measure of the natural hedge that is not subject to the simultaneity of price and yield outcomes. As an initial attempt, we correlate prices with rainfall to obtain a more "natural" natural hedge. From our results, the natural hedge exerts a stabilizing effect on long-run producer revenues, but its impact on insurance decisions is less consistent. |
| Keywords: | production, agricultural risk, natural hedge, Production Economics, Risk and Uncertainty, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235547&r=ias |
| By: | KS, Aditya; Khan, Tajuddin; Kishore, Avinash |
| Keywords: | Crop insurance, Risk, Debt, PSM, Agricultural and Food Policy, Agricultural Finance, International Development, Risk and Uncertainty, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235708&r=ias |
| By: | Bulut, Harun |
| Abstract: | We examine the industry structure of the crop insurance program through the lens of industrial organization theory and develop an analytical framework to evaluate alternative economic design considerations and policy proposals. |
| Keywords: | agricultural (crop and livestock) insurance, oligopoly, oligopsony, double auction, Agricultural and Food Policy, Industrial Organization, Political Economy, Public Economics, Research Methods/ Statistical Methods, Risk and Uncertainty, D81, D82, G22, G28, L13, Q12, Q18, |
| Date: | 2016–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:236008&r=ias |
| By: | Burns, Christopher; Prager, Daniel |
| Abstract: | This paper seeks to understand the effect of crop insurance and direct payments on farm survival and growth, and how this effect differs by the economic size of the farm. Using data from the Agricultural Censuses of 2007 and 2012, along with additional county-level data, we estimate a three stage model that accounts for sample selection bias and the endogeneity of the choice to purchase crop insurance. We also control for characteristics of the principal operator, farm household, and farm operation. Our preliminary results show that government policies in place over the period from 2007 to 2012 played a small but important role in the survival and growth of US commercial farms. |
| Keywords: | direct payments, crop insurance, farm survival, growth, Agricultural and Food Policy, Agricultural Finance, Production Economics, Q12, Q18, |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea16:235693&r=ias |
| By: | Allen L. Schirm; Committee Member Others |
| Keywords: | flood insurance, affordability |
| Date: | 2016–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:a5925e3d4c66493bb3900af8d7ab3864&r=ias |
| By: | Rokicki, Slawa; Donato, Katherine Elizabeth |
| Abstract: | Background In 2003, the Chinese government established the New Cooperative Medical Scheme (NCMS) with the goal of improving health for the country’s 800 million mostly uninsured rural residents. Using new data on objective health measures, we analyzed the program’s effectiveness in improving health for enrollees. Methods Using longitudinal data from the China Health and Nutritional Survey from 2000 to 2009 (12 080 observations across four waves), we analyzed the impact of the NCMS on objective measures of health such as blood pressure, HbA1c, and cholesterol, as well as use of preventive care. In order to overcome inherent selection bias where less healthy people are more likely to enroll in the voluntary health insurance scheme, we used intent-to-treat and instrumental variable analysis strategies, and offered evidence that these approaches can mitigate this bias. Results For every additional year of NCMS coverage, the probability of seeking preventive health care increased by 0.6 percentage points (95% CI 0.1-1.0). However, we did not find evidence that the NCMS resulted in consistent improvements in objective measures of health. Sub-group analysis suggested that lower-income communities benefited more from the program, implying that the program may have resulted in some lessening of the wealth-based disparity in health. Conclusions The NCMS does not appear to significantly improve objective measures of health. This is consistent with evaluations of health insurance programs in other countries, but in contrast to some previously reported improvements in self-reported health resulting from the NCMS. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hrv:faseco:27030489&r=ias |
| By: | Johannes Spinnewijn |
| Abstract: | Recent evidence underlines the importance of demand frictions distorting insurance choices. Heterogeneous frictions cause the willingness to pay for insurance to be biased upward (relative to value) for those purchasing insurance, but downward for those who remain uninsured. The paper integrates this finding with standard methods for evaluating welfare in insurance markets and demonstrates how welfare conclusions regarding adversely selected markets are affected. The demand frictions framework also makes qualitatively different predictions about the desir- ability of policies like insurance subsidies and mandates, commonly used to tackle adverse selection. |
| Keywords: | Heterogeneity; adverse selection; demand frictions; insurance market interventions |
| JEL: | N0 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66511&r=ias |
| By: | Kazuaki Sato (Faculty of Economics, Keio University); Yui Ohtsu (National Institute of Population and Social Security Research); Shintaro Kurachi (Graduate School of Economics, Keio University); Leo Shimamura (Faculty of Economics, Keio University); Yasuto Dobashi (Institute of Contemporary British History, King's College London) |
| Abstract: | This paper explores the relationship between healthcare expenditures and fiscal structures by conducting an international comparison. The difference between a social insurance scheme and a taxation scheme has long been recognized to be a major influence on fiscal resources for medical policies, but it cannot help fully explain the ease of finance. Authors present a comparative analysis of the trend of healthcare expenditures and fiscal structures in the period from 1990 to 2010 in eight countries, namely, Japan, the Netherlands, and France on the one hand (which adopted a social insurance scheme), the U.K., Sweden, Denmark, and Norway on the other (which adopted a taxation scheme). This paper found that healthcare expenditures has increased in centralized countries that have an authority to set insurance premiums or tax rates regardless of population aging. |
| Keywords: | healthcare expenditure, social insurance scheme, taxation scheme, financial structure, international comparison |
| JEL: | H51 I13 H77 |
| Date: | 2016–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2016-010&r=ias |
| By: | Gilad Sorek; Randolph T. Beard |
| Abstract: | We study the implications of extending public-insurance coverage to an existing medical market in Salop’s spatial model of imperfect competition. In this setup a public insurer sets a price to medical providers, which must maintain their reservation pro.t from selling on the spot market directly to consumers. We show that the public insurer can manipulate this reservation profit by setting the coinsurance rate, and that setting the coinsurance rate properly yields the market first best product diversification. The results survive generalizations including moral hazard and incomplete coverage. When adding quality choice to the analysis, a minimum quality standard that is combined with a proper coinsurance rate can still support market efficiency. |
| Keywords: | Public-Insurance; Spatial Monopolistic Competition; Market Efficiency; Regulation |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2016-06&r=ias |
| By: | Krebs, Tom (University of Mannheim); Kuhn, Moritz (University of Bonn); Wright, Mark L. J. (Federal Reserve Bank of Chicago) |
| Abstract: | This paper develops a tractable human capital model with limited enforceability of contracts. The model economy is populated by a large number of long-lived, risk-averse households with homothetic preferences who can invest in risk-free physical capital and risky human capital. Households have access to a complete set of credit and insurance contracts, but their ability to use the available financial instruments is limited by the possibility of default (limited contract enforcement). We provide a convenient equilibrium characterization that facilitates the computation of recursive equilibria substantially. We use a calibrated version of the model with stochastically aging households divided into 9 age groups. Younger households have higher expected human capital returns than older households. According to the baseline calibration, for young households less than half of human capital risk is insured and the welfare losses due to the lack of insurance range from 3 percent of lifetime consumption (age 40) to 7 percent of lifetime consumption (age 23). Realistic variations in the model parameters have non-negligible effects on equilibrium insurance and welfare, but the result that young households are severely underinsured is robust to such variations. |
| Keywords: | human capital risk, limited enforcement, insurance |
| JEL: | E21 E24 D52 J24 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9948&r=ias |