nep-ias New Economics Papers
on Insurance Economics
Issue of 2017‒01‒22
seven papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Why Insurance Regulation is Crucial for Long-term Investment and Economic Growth By Focarelli, Dario
  2. Opportunities for Strengthening Agriculture Insurance Programs: Philippine Crop Insurance Corporation and LGU Partnerships By Reyes, Celia M.; Mina, Christian D.; Agbon, Adrian D.; Gloria, Reneli Ann B.
  3. The role of sickness in the evaluation of job search assistance and sanctions By van den Berg, Gerard J.; Hofmann, Barbara; Uhlendorff, Arne
  4. Welfare Effects of Short-Time Compensation By Helge Braun; Björn Brügemann
  5. Financial and insurance literacy in Poland By Marcin Kawiński; Piotr Majewski
  6. Agricultural Insurance Program: Lessons from Different Country Experiences By Reyes, Celia M.; Mina, Christian D.; Agbon, Adrian D.; Gloria, Reneli Ann B.
  7. Risk Sharing and the Demand for Insurance: Theory and Experimental Evidence from Ethiopia By Erlend Berg; Michael Blake; Karlijn Morsink

  1. By: Focarelli, Dario (LUISS School of European Political Economy)
    Abstract: This paper focuses on the role of insurers as providers of funds for long-term investment in the real economy, with an examination of the European market. The thesis is that financial regulation, and prudential insurance regulation in particular, crucially affects insurers’ investment behavior and therefore their contribution to financial stability and economic growth, which for many reasons will be increasing in the near future. Accordingly, careful assessment of the effects of Solvency II on the insurance industry is required, bearing in mind the regulatory review planned for 2018.
    Keywords: Insurance; Insurance Companies; Regulation
    JEL: G22 G32 L10
    Date: 2017–01–13
  2. By: Reyes, Celia M.; Mina, Christian D.; Agbon, Adrian D.; Gloria, Reneli Ann B.
    Abstract: Providing agricultural insurance to farmers and fisherfolk in the Philippines has been implemented for nearly three decades. While it is agreed that agricultural insurance is crucial in assisting farmers, fisherfolk, and governments in lessening the negative financial impact of natural events, issues of providing premium subsidies and being tied to credit in the Philippines remain to be important policy issues. This paper reviews available information about partnerships between local government units (LGUs) and the Philippine Crop Insurance Corporation. The aim is to look at these innovations that may promote and enhance agricultural insurance in the Philippines. Providing for full premium subsidies and as a form of loan to the farmers was implemented by the LGUs reviewed in this paper. Further study is needed to determine which scheme works best in terms of increasing coverage over the long term and ensuring financial viability.
    Keywords: Philippines, farmers, subsidy, Philippine Crop Insurance Corporation, agricultural insurance, local government units (LGUs), fisherfolk, local government units, financial impact
    Date: 2017
  3. By: van den Berg, Gerard J. (University of Bristol, IFAU Uppsala, IZA, ZEW, CEPR); Hofmann, Barbara (University of Mannheim, IAB Nuremberg); Uhlendorff, Arne (CNRS, CREST, IAB Nuremberg, DIW, IZA)
    Abstract: Unemployment insurance agencies may combat moral hazard by punishing refusals to apply to assigned vacancies. However, the possibility to report sick creates an additional moral hazard, since during sickness spells, minimum requirements on search behavior do not apply. This reduces the ex ante threat of sanctions. Based on a large inflow sample into unemployment of male job seekers in West Germany in the year 2000, we analyze the effects of vacancy referrals and sanctions on the unemployment duration and the quality of job matches, in conjunction with the possibility to report sick. We estimate multispell duration models with selection on unobserved characteristics. We find that a vacancy referral increases the transition rate into work and that such accepted jobs go along with lower wages. We also find a positive effect of a vacancy referral on the probability of reporting sick. This effect is smaller at high durations, which suggests that the relative attractiveness of vacancy referrals increases over the time spent in unemployment. In our setting, with relatively severe sanctions, around 9 percent of sickness absence during unemployment is induced by vacancy referrals.
    Keywords: unemployment; vacancy referrals; physician; wage; unemployment Insurance; monitoring; moral hazard
    JEL: C21 C41 J64 J65
    Date: 2017–01–10
  4. By: Helge Braun (Ruhr Graduate School in Economics, Germany); Björn Brügemann (VU Amsterdam, The Netherlands)
    Abstract: We study welfare effects of public short-time compensation (STC) in a model in which firms respond to idiosyncratic profitability shocks by adjusting employment and hours per worker. Introducing STC substantially improves welfare by mitigating distortions caused by public unemployment insurance (UI), but only if firms have access to private insurance. Otherwise firms respond to low profitability by combining layoffs with long hours for remaining workers, rather than by taking up STC. Optimal STC is substantially less generous than UI even when firms have access to private insurance, and equally generous STC is worse than not offering STC at all.
    Keywords: Short-Time Compensation; Unemployment Insurance; Welfare
    JEL: J65
    Date: 2017–01–16
  5. By: Marcin Kawiński (Warsaw School of Economics); Piotr Majewski (WSB University in Toruń)
    Abstract: The aim of this paper is to present critical analysis of different concepts related to financial literacy. Discussion of usefulness of standard questions on financial literacy and presenting data on the first Polish research of standard questions on financial literacy compared with selected countries. And finally presenting questionnaire for insurance literacy and findings from Polish research.
    Keywords: financial literacy, insurance literacy
    JEL: D14 D83 G11 G21 G22 I20
    Date: 2017
  6. By: Reyes, Celia M.; Mina, Christian D.; Agbon, Adrian D.; Gloria, Reneli Ann B.
    Abstract: While agricultural insurance has long been considered a risk management tool for farmers in both developing and developed economies, policy directions toward sustainability vary across countries. Reviewing the literature provides a comprehensive view of relevant issues, such as objectives of the program, credit access by farmers, program costs, and premium subsidies provided by the national and local governments. This paper provides insights on how agricultural insurance programs from selected developed and developing economies were implemented. Learning from different country experiences, agricultural insurance is important yet costly to implement. Private insurance companies complement with the government-run insurance company to improve coverage rates. Targeting eligible beneficiaries is crucial in the success of a highly subsidized agricultural insurance, especially in developing economies.
    Keywords: Philippines, crop insurance, agricultural insurance, developed economies, developing economies
    Date: 2017
  7. By: Erlend Berg; Michael Blake; Karlijn Morsink
    Abstract: Households, organisations and governments commonly engage in risk sharing. However, residual risk often remains considerable, especially in low-income countries. In response, many policy makers have considered the introduction of insurance. But this raises the question of how demand for insurance depends on the extent of pre-existing risk sharing. We contribute, first, by showing in a simple model that risk sharing is a substitute for indemnity insurance but a complement to index insurance. Second, in an artefactual field experiment with Ethiopian farmers, we are the first to vary the extent of risk sharing exogenously. The predictions from theory are confirmed.
    Date: 2017

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