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on Insurance Economics |
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Issue of 2018‒10‒01
thirty-two papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Alice Burns; Tamara Hayford |
| Abstract: | Medicare beneficiaries may receive services through a traditional fee-for-service (FFS) program or they may enroll in Medicare Advantage (MA), under which they select a private health insurance plan. Medicare pays the MA plan to provide beneficiaries’ health care services. Medicare adjusts payments to MA plans based on beneficiaries’ demographic characteristics and documented health conditions: those traits are summarized in a risk score that estimates the relationship between beneficiary characteristics and FFS Medicare spending. Recent literature finds that health |
| JEL: | I13 I18 H53 |
| Date: | 2017–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:wpaper:53270&r=ias |
| By: | Keith Marzilli Ericson; Justin R. Sydnor |
| Abstract: | Insurance affects the variability of consumption over time, which is not captured in standard expected utility of wealth models. We develop a consumption-utility model that shows how liquidity constraints and borrowing costs impact the value of insurance. Liquidity constraints generate high insurance demand when premiums are due smoothly, sometimes leading to seemingly dominated choices. Conversely, a risk-averse person may value insurance below its expected value and appear risk loving when premiums are due in a single payment. Moreover, optimal insurance contracts take different forms with liquidity constraints. We show empirical insurance analysis using the standard model can generate misleading counterfactuals and welfare estimates. Finally, we demonstrate the model’s feasibility and importance with an application to evaluating cost-sharing reductions on the health insurance exchanges. |
| JEL: | D01 D81 G22 I13 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24993&r=ias |
| By: | Pierre Cahuc; Sandra Nevoux |
| Abstract: | This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating. |
| Keywords: | Short-time work, unemployment insurance, experience rating. |
| JEL: | J63 J65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:693&r=ias |
| By: | Fischer, Torben (University of Mannheim); Frölich, Markus (University of Mannheim); Landmann, Andreas (Paris School of Economics) |
| Abstract: | We present robust evidence on the presence of adverse selection in hospitalization insurance for low-income households. A large randomized control trial from Pakistan allows us to separate adverse selection from moral hazard, to estimate how selection changes at different points of the demand curve and to test simple measures against adverse selection. The results reveal substantial selection in individual policies, leading to welfare losses and the threat of a market breakdown. Bundling insurance policies at the household or higher levels almost eliminates adverse selection, thus mitigating its welfare consequences and creating the possibility for sustainable insurance supply. |
| Keywords: | adverse selection, health insurance, Pakistan |
| JEL: | I13 D82 O12 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11751&r=ias |
| By: | Daria Pelech |
| Abstract: | Physicians’ services account for a substantial portion of health care spending in the United States. Using 2014 claims data from three major insurers, we analyzed the prices paid for 20 common services and compared those prices with the estimated amounts that Medicare’s fee-for-service (FFS) program would pay for the same services. We found that average commercial prices were substantially higher than Medicare FFS prices and were up to three times higher out of network than in network. In contrast, average prices paid by those insurers in their Medicare Advantage plans were |
| JEL: | I10 I11 I13 |
| Date: | 2018–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:wpaper:53441&r=ias |
| By: | Queensley Chukwudum (PAUSTI - Pan African University Institute of Basic Sciences, Technology and Innovation) |
| Abstract: | Insurers that undertake high risk profiles usually exceed their financial capabilities, hence the importance of reinsurance. This allows the insurance company to cover risks that they, under normal circumstances, would not be able to cover on their own. An insurer needs to be able to evaluate his solvency probability and consequently, adjust his retention levels appropriately because the insurer's retention level plays a vital role in determining the premiums he will pay to the reinsurer. To illustrate how Extreme Value theory can be applied, this study delves into modeling the probabilistic behavior of the frequency and severity of large motor claims from the Nigerian insurance sector (2013-2016) using the Negative Binomial-Generalized Pareto distribution (NB-GPD). The annual loss distribution is simulated using the Monte Carlo method. Pricing of the Excess-of-loss (XL) reinsurance is also examined to aid insurers in optimizing their risk management decision in regards to the choice of their risk transfer position. |
| Keywords: | Extreme value theory,Generalized Pareto distribution,Risk Management,XL Reinsurance,Negative Binomial,Monte Carlo simulation |
| Date: | 2018–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01855973&r=ias |
| By: | Devadoss, Stephen; Luckstead, Jeff |
| Abstract: | Abstract We develop a model for a representative risk-averse cotton farmer to analyze the impact of crop insurance policies (RP, YP, STAX, and SCO). The model is calibrated and numerically optimized to quantify the effects of different insurance policy combinations on input use, insurance coverage levels, premiums, and certainty equivalent. When the farmer elects only RP, the optimal coverage rate is 80%. Under RP&STAX, the optimal RP coverage rate is 70% and the STAX coverage rate is 90%. RP&STAX is the optimal policy combination based on certainty equivalents. The RP&SCO combination has the lowest impact of input use. |
| Keywords: | Agricultural and Food Policy, Risk and Uncertainty |
| Date: | 2018–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea18:266763&r=ias |
| By: | Queensley Chukwudum (PAUSTI - Pan African University Institute of Basic Sciences, Technology and Innovation) |
| Abstract: | An insurer's ability to accurately estimate the accumulation of risk, particularly in the right hand tail, is vital in ensuring that his risk appetites matches his risk exposures. This paper, therefore, focuses on the modeling of the extremal dependence structure between insurance risks using the Generalized Pareto distribution and the copula technique. The results obtained after comparing the dependence between large losses from two lines of business (motor and fire) of the Nigerian insurance industry and two specific non-life insurance companies, indicates that the correlation coefficients vary and is generally weak. With the aid of the archimedean copula, the analysis makes use of the data pair exhibiting the highest correlation to draw particular attention to the importance of taking into account the extremal dependence structure when quantifying the risk capital, allocating risk and when estimating the net reinsurance premium under different reinsurance strategies. |
| Keywords: | Tail dependent risks,Reinsurance treaties,Copulas,Economic capital,Stochastic simulation,Extreme value |
| Date: | 2018–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01855971&r=ias |
| By: | Prager, Daniel; Williamson, James M.; Miller, Cristina |
| Keywords: | Agricultural Finance, Consumer/Household Economics, Health Economics and Policy |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259970&r=ias |
| By: | Motamed, Mesbah; Hungerford, Ashley; Rosch, Stephanie; O’Donoghue, Erik; MacLachlan, Matthew; Astill, Gregory; Cessna, Jerry; Joseph Cooper |
| Abstract: | This report describes the current landscape of Federal risk management policies, including the Agricultural Act of 2014, and analyzes the outcomes and interactions of these programs. Despite their common objective of risk reduction, Federal programs differ in their payment mechanisms and their impacts on producer revenue, and uptake has varied significantly across programs and crops. Area-loss insurance programs, such as the Stacked Income Protection Plan and Supplemental Coverage Option, received low enrollments, while applications to the Noninsured Crop Disaster Assistance Program witnessed sizable growth. Differences in program enrollment and program provisions across crops led the bulk of Agriculture Risk Coverage payments to go to producers with corn and soybean base acres, while most Price Loss Coverage payments went to rice, peanuts, and wheat base acres. Half of dairy producers enrolled in the Margin Protection Program for Dairy, but large national margins led to few payments in 2015 and 2016. In contrast, changes in program design led the Livestock Gross Margin for Dairy program to make significantly more indemnity payments per policy. Outside of dairy, the Livestock Forage Program remains the largest livestock support program, though outlays have fallen in recent years. |
| Keywords: | Risk and Uncertainty |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:276229&r=ias |
| By: | Gallenstein, Richard; Flatnes, Jon Einar; Dougherty, John; Mishra, Khushbu; Miranda, Mario; Sam, Abdoul |
| Keywords: | Financial Economics, International Development, Agricultural Finance |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259210&r=ias |
| By: | Kramer, B.; Ceballos, F. |
| Abstract: | Bundling agricultural insurance with climate-smart technologies and practices (CSA) can help improve risk management for smallholder farmers. This paper analyzes how bundling affects demand for insurance and CSA. Calibrating index insurance parameters to CSA payoff profiles increases the demand for insurance, but only when basis risk is low, and these effects of reducing basis risk itself. This raises the question how to bundle insurance products that leverage new technologies to provide indemnity insurance coverage with minimal basis risk. We therefore study the effect of bundling indemnity insurance with CSA technologies. Specifically, in a field experiment in India, we test whether conditioning insurance payouts on not burning residues improves residue management as a CSA technology. We find that this is the case, suggesting that indemnity insurance can help promote CSA technology adoption, but we also discuss shortcomings of this bundling approach, and identify potential alternatives to combine indemnity insurance and CSA technologies into a complementary risk management bundle. |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy, International Development |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:275926&r=ias |
| By: | Ifft, Jennifer; Jodlowski, Margaret |
| Keywords: | Crop Production/Industries, Agricultural Finance, Agribusiness |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259120&r=ias |
| By: | Perry, Edward; Yu, Jisang; Tack, Jesse B. |
| Keywords: | Agricultural and Food Policy, Production Economics, Resource/Energy Economics and Policy |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259961&r=ias |
| By: | Embaye, Weldensie T.; Bergtold, Jason S. |
| Keywords: | Production Economics, Community/Rural/Urban Development, Productivity Analysis |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:258107&r=ias |
| By: | Kirwan, Barrett E. |
| Keywords: | Risk and Uncertainty, Agricultural Finance, Crop Production/Industries |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259162&r=ias |
| By: | Queensley Chukwudum (PAUSTI - Pan African University Institute of Basic Sciences, Technology and Innovation) |
| Abstract: | In this paper one of the foundational theories in actuarial science-the Empirical Bayes credibility theory model 1 (Buhlmann model), is applied to estimate the pure risk premium based on the aggregate net claim data of 5 years (2009-2013). This involves estimating the credibility premium in the next year (2014). Five different classes of risk are considered from the insurance industry in Nigeria-fire, accident, motor, marine and, oil and gas insurance portfolios. Verification of the unbiasedness of the structural parameters of the credibility factor is presented. A chi-square goodness of fit test is carried out to compare the estimated values with the actual claim data. The result shows that there is no significant difference between the estimated values and the actual values for the year 2014. |
| Keywords: | EBCT model 1 (Buhlmann Model), Credibility Premium,Additional Keywords and Phrases: Insurance Portfolios, Unbiased Estimators, Aggregate Net Claims, Chi-square goodness of fit test |
| Date: | 2018–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01855972&r=ias |
| By: | Connor, Lawson; Marlow, Scott; Rejesus, Roderick M. |
| Keywords: | Resource/Energy Economics and Policy, Agricultural and Food Policy, Risk and Uncertainty |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259957&r=ias |
| By: | Sun, Huichun; Hurley, Terrance M. |
| Keywords: | Agricultural and Food Policy, Risk and Uncertainty, Institutional and Behavioral Economics |
| Date: | 2017–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:258247&r=ias |
| By: | Keith Kranker; Mary Kay Fox; Pia Caronongan |
| Abstract: | The U.S. Department of Agriculture’s (USDA) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) safeguards the health of low-income pregnant and postpartum women, infants, and children up to age 5 who are at nutritional risk. |
| Keywords: | WIC program, linking administrative data, prenatal WIC participation, child WIC participation, birth outcomes, breastfeeding initiation, maternal weight gain, health care utilization, Medicaid costs, WM-II, WIC-Medicaid II Feasibility Study |
| JEL: | I0 I1 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:0b6f25fcfe21426ba3912c81a5f9ead1&r=ias |
| By: | Chen, Huang |
| Keywords: | Risk and Uncertainty, Agricultural and Food Policy, Production Economics |
| Date: | 2017–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:258212&r=ias |
| By: | Daniela Escobar; Georg Pflug |
| Abstract: | Distortion (Denneberg 1990) is a well known premium calculation principle for insurance contracts. In this paper, we study sensitivity properties of distortion functionals w.r.t. the assumptions for risk aversion as well as robustness w.r.t. ambiguity of the loss distribution. Ambiguity is measured by the Wasserstein distance. We study variances of distances for probability models and identify some worst case distributions. In addition to the direct problem we also investigate the inverse problem, that is how to identify the distortion density on the basis of observations of insurance premia. |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1809.06592&r=ias |
| By: | Tracey, Marlon R. (Southern Illinois University Edwardsville); Polachek, Solomon (Binghamton University, New York) |
| Abstract: | The Short-Time Compensation (STC) program enables US firms to reduce work hours via pro-rated Unemployment Insurance (UI) benefits, rather than relying on layoffs as a cost-cutting tool. Despite the program's potential to preclude skill loss and rehiring/ retraining costs, firms' participation rates are still very low in response to economic downturns. Using firm-level UI administrative data, we show why by illustrating which type firms benefit from the program and which do not. Semiparametric estimation indicates STC reduces layoff rates for cyclically sensitive firms by about 15%, but has no effect for more cyclically stable firms. |
| Keywords: | short-time compensation, layoffs, inverse probability weighting, heterogeneity, finite mixture model |
| JEL: | C21 C38 J63 J65 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11746&r=ias |
| By: | Mathieu Grégoire (Université de Paris Ouest - Nanterre-La Défense); Mathilde Guergoat-Larivière (CNAM - Conservatoire National des Arts et Métiers [CNAM]); Claire Vivès (CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé) |
| Abstract: | Ongoing employment transformations question our social protection systems, in particular unemployent benefits and how to finance them. Shedding light on the advantages and limits of existing devices and showing how various actors (workers, unemployed, job centers, employers, unions…) deal with this topic, this special issue brings some first answers. |
| Abstract: | Les transformations de l'emploi en cours amènent à réfléchir à des options nouvelles concernant l'ampleur et les contours de la protection sociale, le niveau d'indemnisation et le mode de financement du système d'indemnisation du chômage. En éclairant les atouts et les limites des dispositifs existants et la manière dont les différents acteurs (travailleurs, employeurs, service public de l'emploi, syndicats…) s'emparent de ces questions, les contributions de ce numéro apportent des premières réponses. |
| Keywords: | unemployment benefits,wage labour,non-standard employment,Unemployment,activation policies,employment trajectories,social protection,industrial relations,workfare,salariat,indemnisation,formes atypiques d’emploi,Chômage,relations professionnelles,activation,intermédiation,protection sociale,activité réduite,trajectoires professionnelles |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01840026&r=ias |
| By: | Che, Yuyuan; Feng, Hongli; Hennessy, David A. |
| Keywords: | Agricultural and Food Policy, Institutional and Behavioral Economics, Risk and Uncertainty |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:259190&r=ias |
| By: | Zeytoon Nejad Moosavian, Seyyed Ali |
| Keywords: | Risk and Uncertainty, Demand and Price Analysis, Agricultural and Food Policy |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:258104&r=ias |
| By: | Williams, Brian; Williams, Angelica S.; Dicks, Mike |
| Keywords: | Consumer/Household Economics, Institutional and Behavioral Economics |
| Date: | 2018–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea18:266778&r=ias |
| By: | Keith Kranker; Mary Kay Fox; Pia Caronongan |
| Abstract: | This report presents findings from the WIC-Medicaid II Feasibility Study (WM-II). |
| Keywords: | WIC program, linking administrative data, prenatal WIC participation, child WIC participation, birth outcomes, breastfeeding initiation, maternal weight gain, health care utilization, Medicaid costs, WM-II, WIC-Medicaid II Feasibility Study |
| JEL: | I0 I1 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:fb21857415324280ae34833858af734a&r=ias |
| By: | Keith Kranker; Mary Kay Fox; Nora Paxton; Jessica Galin |
| Abstract: | This report presents findings from the WIC-Medicaid II Feasibility Study (WM-II). |
| Keywords: | WIC program, linking administrative data, prenatal WIC participation, child WIC participation, birth outcomes, breastfeeding initiation, maternal weight gain, health care utilization, Medicaid costs, WM-II, WIC-Medicaid II Feasibility Study |
| JEL: | I0 I1 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:4a12e2c45c84458fb0e97aaecb1d384f&r=ias |
| By: | Ward, Patrick S.; Kumar, Neha; De Nicola, Francesca; Hill, Ruth; Makhija, Simrin; Spielman, David J.; Magnan, Nicholas |
| Keywords: | International Development, Risk and Uncertainty, Institutional and Behavioral Economics |
| Date: | 2017–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea17:258090&r=ias |
| By: | Ginger Zhe Jin; Ajin Lee; Susan Feng Lu |
| Abstract: | Medicare does not pay for a skilled nursing facility (SNF) unless a fee-for-service patient has stayed in the hospital for at least three days. Discharges after the three-day cutoff consistently result in more transfers to SNFs. Using the three-day rule as an instrument, we find that SNF discharges decrease hospital readmission for patients with comorbidities. However, for knee and hip replacement patients, we find significant increases in readmission. This perverse effect is more severe when local SNFs have lower quality. Back-of-the-envelope calculations suggest that the three-day rule may have generated extra Medicare payments to SNFs by $100-447 million per year. |
| JEL: | D8 H51 I13 I18 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25017&r=ias |
| By: | Willcocks, Leslie; Lacity, Mary; Craig, Andrew |
| Abstract: | The case presents a series of dilemmas facing senior executives thinking through the potential application of robotic process automation (RPA) into a human resource (HR) function and global business service (GBS) operations. The executives are pointed to successful RPA implementation by business process service provider Xchanging, operating in the back office of the London insurance market. The teaching case focuses on what can be learned from that experience, and how their own RPA use may differ in HR and GBS contexts. The teaching case requires important decisions to be made about the business case for RPA and cognitive automation, the type of automation to be deployed, how to implement effectively in HR and GBS contexts, and whether to use RPA tactically or strategically, and if the latter, the implications of this decision. Students and practitioners will gain insight into the service automation landscape, RPA risks, challenges, and effective deployment, and will lean how to plan for (a) service automation strategy and building a mature automation capability, (b) mitigate the risks, and (c) progress launch, change management and detailed implementation in multiple business contexts. |
| Keywords: | robotic process automation; strategy; automation risks; RPA implementation; global business services; human resources function; business process outsourcing |
| JEL: | N0 |
| Date: | 2017–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:71146&r=ias |