nep-ias New Economics Papers
on Insurance Economics
Issue of 2018‒04‒09
fifteen papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Lapses in Long-Term Care Insurance By Leora Friedberg; Wenliang Hou; Wei Sun; Anthony Webb
  2. The Labor Market Effects of U.S. Reemployment Policy: Lessons from an Analysis of Four Programs during the Great Recession By Peter Mueser; Marios Michaelides
  3. Pradhan Mantri Fasal Bima Yojana: Challenges and Way Forward By Kainth, Gursharan Singh; Bawa, Rajinder Singh; Kainth, Navdeep Singh
  4. Belgium; Financial System Stability Assessment-Technical Note-Banking, Insurance, and Financial Conglomerate Supervision By International Monetary Fund
  5. Lapse tables for lapse risk management in insurance: a competing risk approach By Xavier Milhaud; Christophe Dutang
  6. Using a Kinked Policy Rule to Estimate the Effect of Experience Rating on Disability Inflow By Kyyrä, Tomi; Paukkeri, Tuuli
  7. Dominated Options in Health-Insurance Plans By Chenyuan Liu; Justin R. Sydnor
  8. Unemployment Insurance in America: A model for Europe? By Lenaerts, Karolien; Paquier, Félix; Simonetta, Suzanne
  9. Indonesia; Financial Sector Assessment Program-Detailed Assessment of Observance—Insurance Core Principles By International Monetary Fund
  10. Belgium; Financial System Stability Assessment By International Monetary Fund
  11. Belgium; Financial System Stability Assessment-Technical Note- Stress Testing the Banking and Insurance Sectors and Systemic Risk Analysis By International Monetary Fund
  12. Belgium; Financial System Stability Assessment-Technical Note- Financial Safety Net and Crisis Management By International Monetary Fund
  13. Man vs Robots? Future Challenges and Opportunities within Artificial Intelligence Health Care Education Model By Shanel Lu; Sharon L. Burton
  14. Basic income or a single tapering rule? Incentives, inclusiveness and affordability compared for the case of Finland By Jon Kristian Pareliussen; Hyunjeong Hwang; Heikki Viitamäki
  15. Productivity of the English National Health Service: 2015/16 Update By Adriana Castelli; Martin Chalkley; Idaira Rodriguez Santana

  1. By: Leora Friedberg; Wenliang Hou; Wei Sun; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: About a quarter of people with long-term care insurance let their policies lapse before they die. This study shows that policyholders who enter nursing homes are more likely to let their insurance lapse due to cognitive impairment. For these individuals, long-term care insurance is worse than useless. They not only lose their premiums, but also spend down their wealth too rapidly, erroneously believing that their insurance policy will cover long-term care costs at older ages.
    Keywords: long-term care insurance, insurance lapsing, insurance companies
    JEL: G22 D14
    Date: 2017–06
  2. By: Peter Mueser (University of Missouri); Marios Michaelides (University of Cyprus)
    Abstract: We present experimental evidence on four U.S. reemployment programs targeting Unemployment Insurance (UI) recipients during the Great Recession. All programs reduced UI spells, produced UI savings that exceeded program costs, and increased employment rates. The services-referral program had the smallest effects, occurring because of voluntary participant exit from UI to avoid requirements. The two programs that reviewed participants’ UI eligibility produced higher effects because they induced voluntary exits and disqualified participants not engaged in active job search or for other reasons. The program requiring participation in both the eligibility review and job counseling services was the most effective, indicating that services improved participants’ job search efforts.
    Keywords: Great Recession, job counseling, reemployment assistance, active labor market policies, eligibility review, unemployment, Unemployment Insurance, program evaluation
    JEL: J6 H4
    Date: 2017–12
  3. By: Kainth, Gursharan Singh; Bawa, Rajinder Singh; Kainth, Navdeep Singh
    Abstract: The Indian agricultural environment has undergone numerous structural changes due to changes in the government policies. One new government policy, Pradhan Mantri Fasal Bima Yojana (PMFBY) could have wide-ranging effects. The study covered the opportunities and constraints for agricultural insurance in India, how PMFBY will be supported and governance will be maintained, and the best strategy for technology to increase farmer’s awareness and successful implementation. Under PMFBY, the government’s focus will be to bring in more farmers without loans (which comprise merely 5 per cent of total farmers at present) under the scheme. A total of 5,000 automated weather stations will be set up across the country. The IRDA (Insurance Regulatory and Development Authority), AIC (Agricultural Insurance Company), and 11 private and four state-owned non-life insurers have expressed their interest to participate in the scheme. Opportunities for agricultural insurance in India are numerous and insurance can be a risk transfer mechanism for Indian farmers that depend heavily on rains especially with the increasing influence of climate change. There is room for experiments and expansion of new insurance products since penetration is low and there also a favorable political environment for insurance and support of agricultural livelihoods.
    Keywords: PMFBY, post harvest loss, weather based insurance, low premium, IRDA, AIC, KCC, Agribusiness, Agricultural Finance,
    Date: 2016–06
  4. By: International Monetary Fund
    Abstract: The regulatory framework for Belgian financial institutions has been strengthened substantially since the 2013 FSAP. Notably, new national banking and insurance laws have been issued, the Bank Recovery and Resolution Directive (BRRD) and amendments to Financial Conglomerate Directive (FICOD) have been transposed, Solvency II has been implemented, and the National Bank of Belgium (NBB) has been designated as the macroprudential authority. This has improved significantly the regulatory framework and broadened its scope to better address the challenges posed by financial conglomerates (FC).
    Date: 2018–03–08
  5. By: Xavier Milhaud (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Christophe Dutang (LMM - Laboratoire Manceau de Mathématiques - UM - Le Mans Université)
    Abstract: This paper deals with the crucial problem of modeling policyholders' behaviours in life insurance. We focus here on the surrender behaviours and model the contract lifetime through the use of survival regression models. Standard models fail at giving acceptable forecasts for the timing of surrenders because of too much heterogeneity, whereas the competing risk framework provides interesting insights and more accurate predictions. Numerical results follow from using Fine & Gray model ([13]) on an insurance portfolio embedding Whole Life contracts. Through backtests, this framework reveals to be quite efficient and recovers the empirical lapse rate trajectory by aggregating individual predicted lifetimes. These results could be particularly useful to design future insurance product. Moreover, this setting allows to calibrate experimental lapse tables, simplifying the lapse risk management for operational teams.
    Keywords: life insurance,lifetime,surrender,lapse,competing risks,cumulative incidence functions
    Date: 2018
  6. By: Kyyrä, Tomi; Paukkeri, Tuuli
    Abstract: We study whether the experience rating of employers’ disability insurance premiums affects the inflow to disability benefits in Finland. To identify the causal effect of experience rating, we exploit “kinks†in the rule that specifies the degree of experience rating as a function of firm size. Using comprehensive matched employer-employee panel data, we estimate the effects of experience rating on the inflow to sickness and disability benefits. Our results suggest that experience rating has reduced the disability inflow among men under age 50. For other groups we find no significant effects, yet we cannot rule out relatively small effects.
    Keywords: experience rating, disability insurance, early retirement, Social security, taxation and inequality, J14, J26, H32,
    Date: 2018
  7. By: Chenyuan Liu; Justin R. Sydnor
    Abstract: Recent studies have found that many people select into health plans with higher coverage (e.g., lower deductibles) even when those plans are financially dominated by other options. We explore whether having dominated options is common by analyzing data on plan designs from the Kaiser Family Foundation Employer Health Benefits Survey for firms that offered employees both a high-deductible (HD) health plan and a lower-deductible (LD) option. In 65% of firms the high-deductible option would result in lower maximum possible health spending for the employee for the year. We estimate that the HD plan financially dominates the LD plan at roughly half of firms across a wide range of possible health spending needs employees might anticipate. The expected savings from selecting the HD plan are typically over $500 per year, often with no increase in financial risk. We present evidence that these patterns may arise naturally from employers passing through large average-cost differences between HD and LD plans to their employees. We discuss the implications of those dynamics for the nature of transfers between employees and the efficiency of health spending.
    JEL: D22 G22 I13
    Date: 2018–03
  8. By: Lenaerts, Karolien; Paquier, Félix; Simonetta, Suzanne
    Abstract: After the crisis, the longstanding debate on a European unemployment benefits scheme (EUBS) was revived as part of a much larger debate on the need for a supranational automatic stabilisation function for Europe. The American unemployment insurance (UI) system, given its two-tier structure, has often been regarded as a model for a potential EUBS. Previous research has examined the lessons to be learned from the US UI. This paper builds on this literature but goes one step further as it carefully assesses whether the lessons from the US system could actually be implemented in a European context. Indeed, while there are important parallels between the US and the EU in some areas, significant differences in others may complicate implementation or even render it impossible. In this paper, the aim, therefore, is to identify the aspects of the US system to draw inspiration from – in light of the EU’s institutional and political realities – and explain how they inform a potential EUBS. This exercise concentrates on the design and implementation of a potential EUBS. The paper highlights that a two-tier system helps to better attain the goals of unemployment insurance, as demonstrated by the American experience. It also shows the advantages of being pragmatic and taking an incentives-based approach. Other issues, such as solidarity and redistribution, seem more difficulty to tackle in Europe than in the American context and would require further examination. Finally, discretionary measures should be considered with caution.
    Date: 2017–06
  9. By: International Monetary Fund
    Abstract: The insurance sector is rapidly growing through conglomeration, bancassurance and increased sales of investment products. While the insurance sector is still smaller than the banking sector, it has grown rapidly at an average of 20 percent per year over the last 5 years. About the half of insurers belong to conglomerates, typically led by banks but with a number of other financial and non-financial entities within the group. Because of regulations on intra-group transactions from insurance entities, some insurance entities could have material exposures to the affiliates. Bancassurance is playing a very important role in the insurance distribution, mainly in relation to investment products, such as unit-linked products.
    Date: 2018–03–12
  10. By: International Monetary Fund
    Abstract: Belgium’s financial landscape has changed significantly since the global financial crisis (GFC). The banking system has contracted mainly because of restructuring operations in entities that received government support. Banks have adopted more traditional business models, with greater emphasis on domestic lending and deposit funding. The insurance sector has seen some consolidation and is gradually moving away from traditional insurance products towards asset management-type products. Cross-border financial linkages, while still significant, have declined and Brussels remains the home of globally significant financial market infrastructures (FMIs) and service providers.
    Date: 2018–03–08
  11. By: International Monetary Fund
    Abstract: Belgium’s financial landscape has changed since the global financial crisis (GFC) and the European sovereign crisis. The banking system has contracted driven by restructuring operations in entities that received government support. Banks have adopted more traditional business models, with greater emphasis on domestic lending and deposit funding. The insurance sector has seen some consolidation and a gradual move away from traditional insurance products to asset management-type products. The scale of cross-border linkages in the financial system, while still significant, has declined markedly.
    Date: 2018–03–08
  12. By: International Monetary Fund
    Abstract: While actions in Belgium and at the European Union (EU) level have improved the Belgian financial safety net and crisis management arrangements, Belgium still faces challenges and further actions are needed to improve its operational capacity. At the EU level, the establishment of the single supervisory mechanism (SSM) and the single resolution mechanism (SRM) are important improvements. The Belgian authorities, particularly the National Bank of Belgium (NBB), continue to play a critical role in maintaining financial stability in Belgium, through participation in the SSM and the SRM, and their national roles for deposit insurance and emergency liquidity assistance (ELA) for all banks, and recovery and resolution (planning) for certain banks.
    Date: 2018–03–08
  13. By: Shanel Lu (EmergenceAI); Sharon L. Burton (SLBurtonConsulting)
    Abstract: This study investigated the need to provide a formal artificial intelligence (AI) health care education model to the 21th century AI health care learners. Health care has continuously transformed at all levels of health care administrative, operational, and practical. This vastly changing health care industry requires a synthesis of communicating multifaceted and diverse forms of thinking. AI health care professional entities within business, technology, art, biomedical, and other health care related sectors must work cross-functionally to establish roles that will meet the need toward improving health care at all levels. In order to achieve this pursuit, we researched and investigated how to create an AI health care education model fostering collaboration and innovation. There has been a significant calling for AI heath care collaboration of academicians, clinical scientist, and health care practitioners of all levels to identify a comprehensive AI health care education model due to the current void in the health care course design. To further this empirical study, the researchers focused on a qualitative study comprising of qualitative interviews and surveys inviting participants from the AI health care, business, biomedical, clinical scientist, academia, and capital investors to expound on the level of significance each professional sector have toward AI Health care education.
    Keywords: Health Care technology solutions, Health care Technology solutions education, Incubator Clinical Hours, Emergence AI Curriculum Design Mode
    Date: 2017
  14. By: Jon Kristian Pareliussen; Hyunjeong Hwang; Heikki Viitamäki
    Abstract: The combination of different working-age benefits, childcare costs and income taxation creates complexity, reduces work incentives and holds back employment. This paper compares Finland’s benefit system with two benefit reform scenarios: a uniform benefit for all (“basic income”) and a universal tapering rule (“universal credit”). The scenarios are modelled in the OECD TaxBen model and the TUJA microsimulation model. We find that replacing current benefits with a basic income would improve incentives for many, but with a drastic redistribution of income and likely increasing poverty as a result. Merging working-age benefits with similar aims and coordinating their tapering against earnings would on the other hand consistently improve work incentives and transparency, while preserving or improving social protection.
    Keywords: basic income, Finland, inequality, universal credit, welfare reform, work incentives
    JEL: D31 H53 H55 J38
    Date: 2018–04–10
  15. By: Adriana Castelli (Centre for Health Economics, University of York, York, UK); Martin Chalkley (Centre for Health Economics, University of York, York, UK); Idaira Rodriguez Santana (Centre for Health Economics, University of York, York, UK)
    Abstract: This report updates the Centre for Health Economics’ time series of National Health Service (NHS) productivity growth for the period 2014/15 to 2015/16. It also reports trends in output, input and productivity since 2004/05. NHS productivity growth is measured by comparing growth in the outputs produced by the NHS to growth in the inputs used to produce them. NHS outputs include all the activities undertaken for NHS patients wherever they are treated in England and accounts for changes in the quality of care provided to those patients. NHS inputs include the number of doctors, nurses and support staff providing care, the equipment and clinical supplies used, and the facilities of hospitals and other premises where care is provided.
    Date: 2018–04

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