nep-ias New Economics Papers
on Insurance Economics
Issue of 2019‒01‒21
twenty papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. D and O Insurance and Arbitration By Katica Tomic
  2. Do myopia and asymmetric information matter in the demand for social insurance? By Walid Merouani; Nacer-Eddine Hammouda; Claire El Moudden
  3. The Evolution of Social Security in Jordan’s Labor Market: A Critical Comparison Between Pre- and Post- 2010 Social Security Reform By Ibrahim Al Hawarin; Irène Selwaness
  4. Reinsurance, Repayments, and Risk Adjustment in Individual Health Insurance: Germany, The Netherlands and the U.S. Marketplaces By Thomas G. McGuire; Sonja Schillo; Richard C. van Kleef
  5. The Effect of a Ban on Gender-Based Pricing on Risk Selection in the German Health Insurance Market By Huang, Shan; Salm, Martin
  6. On the role of probability weighting on WTP for crop insurance with and without yield skewness By Douadia Bougherara; Laurent Piet
  7. Promoting Readiness of Minors in Supplemental Security Income (PROMISE): California PROMISE Process Analysis Report By Holly Matulewicz; Karen Katz; Todd Honeycutt; Jacqueline Kauff; Joseph Mastrianni; Adele Rizzuto; Claire Smither Wulsin
  8. A Qualitative Study of Employment Experiences of DI Beneficiaries after Receipt of an Overpayment By John Kregel
  9. Impact of Community-Based Health Insurance on Child Health Outcomes: Evidence on Stunting from Rural Uganda By Nshakira-Rukundo, Emmanuel; Mussa, Essa Chanie; Gerber, Nicolas; von Braun, Joachim
  10. Estimating population average treatment effects from experiments with noncompliance By Kellie Ottoboni; Jason Poulos
  11. Can Community-Based Health Insurance Nudge Preventive Health Behaviours? Evidence from Rural Uganda By Nshakira-Rukundo, Emmanuel; Mussa, Essa Chanie; Nshakira, Nathan; Gerber, Nicolas; von Braun, Joachim
  12. Potential drivers of insurers equity investments By Petr Jakubik; Eveline Turturescu
  13. Early warning system for the European Insurance Sector By Lorenzo Danieli; Petr Jakubik
  14. Endogenous Beliefs and Institutional Structure in Competitive Equilibrium with Adverse Selection By Gerald D. Jaynes
  15. Urgent Care Utilization By Alyssa Maccarone; Amy Gehrke; Nancy Clusen
  16. Does Obamacare Care? A Fuzzy Difference-in-discontinuities Approach By Hector Galindo-Silva; Nibene Habib Some; Guy Tchuente
  17. How Accountable Care Organizations Use Population Segmentation to Care for High-Need, High-Cost Patients By Ann S. O’Malley; Eugene C. Rich; Rumin Sarwar; Eli Schultz; W. Cannon Warren; Tanya Shah; Melinda K. Abrams
  18. Referrals to Specialists By Bonnie Harvey; Amy Gehrke; Kevin Shang; Nancy Clusen
  19. Regional variation in healthcare utilization and mortality By Anna Godøy; Ingrid Huitfeldt
  20. Spending the night?. Provider incentives, capacity constraints and patient outcomes By Ingrid Huitfeldt

  1. By: Katica Tomic (Rechtsanwalte BVM)
    Abstract: Directors and officers ("D&O") are required to act in a good faith and in the best interests of the corporation and to ensure that, the corporation is managed in accordance with the corporation's articles of incorporation and internal by-laws. D&O are personally liable for actions committed by the corporation within their scope of authority, and their own personal assets are at the risk in the event of a lawsuit against the corporation and its management or corporate insolvency. Today's complex business, legal and regulatory environment have increased the number of disputes involving the personal liability of D&O and D&O insurance, and the option of the more efficient, flexible, expert, and enforceable dispute resolution mechanisms, becomes the substantial interest of the parties involved. In this article, we discuss the general principles of D&O liability and D&O insurance, and relevant court cases concerning D&O liability and insurance coverage disputes in EU Law. Having in mind basic characteristics of modern insurance regulations, in particular, the need to protect a policyholders' interests and insurance customers and the premise that classic (commercial) arbitration is not a priori suitable for D&O insurance disputes, the author advocates introduction of specific integrated arbitration proceedings for D&O insurance cases. By assessing arbitration proceedings in D&O insurance, this analyze allows us to draw conclusion on whether the resolution of D&O insurance disputes by means of arbitration should be considered more often, or court litigation is more suitable for D&O insurance cases.
    Keywords: D&O liability insurance, EU Law, arbitration provisions, insurance companies, insurance coverage, integrated arbitration proceedings
    Date: 2018–11
  2. By: Walid Merouani (Centre de Recherche en Economie Appliquée pour le Développement (ALGERIE)); Nacer-Eddine Hammouda; Claire El Moudden
    Abstract: This article challenges the topic of low demand for social insurance by exploring an original survey in the Algerian labor market. Related literature has focused on the efficiency of social insurance systems and discussed their ability to cover everyone. On the other hand, empirical studies highlighted the role of socio-demographic factors in understanding the low social insurance coverage. But the use of behavioral economics tools is still scarce in this field. This article highlights the impact of time discounting and knowledge of social policy on the demand for social insurance. To make the result more robust, we use the discrete choice model. The outcome clearly shows that forward looking and knowing social security rules increase the participation to social insurance system. Furthermore, we confirm the role of age, gender, income and education, to be significant determinants of social insurance demand. We argue these conclusions should have practical policy implications.
    Date: 2018–06–28
  3. By: Ibrahim Al Hawarin (Al-Hussein Bin Talal University); Irène Selwaness
    Abstract: Jordan has undergone a profound social security reform since 2010, primarily aiming to ensure the financial sustainability of the system over time. The reform measures mainly included increasing the age of early retirement and the minimum contributions required to claim it, increasing employee and employer monthly contributions, covering even micro firms (with at least one employee), and allowing the self-employed and inactive housewives to voluntarily participate. Using data from the 2010 and 2016 Jordan Labor Market Panel Survey (JLMPS), this paper examines the dynamics of Jordanian workers’ access to social security before and after the 2010 reform and the coverage incidence across different firm sizes and workers’ characteristics. The paper also explores the time it takes to acquire social security coverage on the labor market before and after the reform. Moreover, trends in early retirement incidence among middle-aged male workers are examined. Our findings show that the overall incidence of social insurance coverage appears to slightly increase in 2016, for private sector wage workers, irregular wage workers, and non-wage workers (employers and self-employed). Workers starting in the public sector were the most likely to acquire social insurance coverage at the start of their jobs, followed by the private wage workers inside establishment. Both men and women who started their first job after the 2010 reform experienced a decline in their proportion of acquiring social insurance coverage upon their job start. Moreover, the average incidence of early retirement slightly declined among men while still being highly prevalent around ages 40-46.
    Date: 2018–04–26
  4. By: Thomas G. McGuire; Sonja Schillo; Richard C. van Kleef
    Abstract: Reinsurance can complement risk adjustment of health plan payments to improve fit of payments to plan spending at the individual and group level. This paper proposes three improvements in health plan payment systems using reinsurance. First, we base reinsurance payments on spending not accounted for by the risk adjustment system, rather than just high spending. Second, we propose pairing reinsurance for individual-level losses with repayments for individual-level profits. Third, we optimize the weights on the risk adjustors taking account of the presence of reinsurance/repayment. We implement our methodology in data from Germany, The Netherlands and the U.S. Marketplaces, comparing our modified approach to plan payment with risk adjustment as currently practiced in the three settings. The combination of the three improvements yields very substantial improvements in the individual-level fit of payments to plan spending in all three countries.
    JEL: I10 I11
    Date: 2018–12
  5. By: Huang, Shan (DIW Berlin); Salm, Martin (Tilburg University)
    Abstract: Starting from December 2012, insurers in the European Union were prohibited from charging gender-discriminatory prices. We examine the effect of this unisex mandate on risk segmentation in the German health insurance market. While gender used to be a pricing factor in Germany's private health insurance (PHI) sector, it was never used as a pricing factor in the social health insurance (SHI) sector. The unisex mandate makes PHI relatively more attractive for women and less attractive for men. Based on data from the SOEP we analyze how the unisex mandate affects the difference between women and men in switching rates between SHI and PHI. We find that the unisex mandate increases the probability of switching from SHI to PHI for women relative to men. This effect is strongest for self-employed individuals and mini-jobbers. On the other hand, the unisex mandate had no effect on the gender difference in switching rates from PHI to SHI. Because women have on average higher health care expenditures than men, our results imply a reduction of advantageous selection into PHI. Our results demonstrate that regulatory measures such as the unisex mandate can reduce risk selection between public and private health insurance sectors.
    Keywords: unisex mandate, public and private health insurance, risk selection, Germany
    JEL: I13 D82 H51
    Date: 2018–11
  6. By: Douadia Bougherara (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Laurent Piet (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST)
    Abstract: A growing number of studies in finance and economics seek to explain insurance choices using the assumptions advanced by behavioral economics. One recent example in agricultural economics is the use of cumulative prospect theory (CPT) to explain farmer choices regarding crop insurance coverage levels (Babcock, 2015). We build upon this framework by deriving willingness to pay (WTP) for insurance programs under alternative assumptions, thus extending the model to incorporate farmer decisions regarding whether or not to purchase insurance. Our contribution is twofold. First, we study the sensitivity of farmer WTP for crop insurance to the inclusion of CPT parameters. We find that loss aversion and probability distortion increase WTP for insurance while risk aversion decreases it. Probability distortion in losses plays a particularly important role. Second, we study the impact of yield distribution skewness on farmer WTP assuming CPT preferences. We find that WTP decreases when the distribution of yields moves from negatively- to positively-skewed and that the combined effect of probability weighting in losses and skewness has a large negative impact on farmer WTP for crop insurance.
    Keywords: Crop Insurance,Cumulative Prospect Theory,premium subsidy,skewness
    Date: 2018–12–07
  7. By: Holly Matulewicz; Karen Katz; Todd Honeycutt; Jacqueline Kauff; Joseph Mastrianni; Adele Rizzuto; Claire Smither Wulsin
    Abstract: This report presents findings on the implementation and operation of the CaPROMISE program, which was designed to (1) provide educational, vocational, and other services to SSI youth and their families and (2) improve service coordination among state and local agencies serving that population.
    Keywords: disability, SSI, youth, employment, education, PROMISE
    JEL: I J
  8. By: John Kregel
    Abstract: This study examined the effect of overpayments on the employment retention of working Social Security beneficiaries.
    Keywords: Social Security Disability Insurance, overpayments, work incentives planning and assistance
    JEL: I J
  9. By: Nshakira-Rukundo, Emmanuel; Mussa, Essa Chanie; Gerber, Nicolas; von Braun, Joachim
    Abstract: While community-based health insurance (CBHI) becomes increasingly integrated into health systems in developing countries, there is still limited research and evidence on its probable health impacts beyond its functions for health financing or for facilitating access to services. Using a cross-sectional data from rural south-west Uganda, we apply a two-stage residual inclusion instrumental variables method to study the impact of community health insurance on stunting in children under five years. Results indicate that each year a household was enrolled in insurance was causally associated with a reduction in the probability of stunting of 5.7 percentage points. Predictive marginal effects show that children in households which have had insurance for at least 5 years had a probability of stunting of only 0.353 compared to 0.531 for children in households with no insurance. Households in CBHI were more likely to attend more free antenatal and postnatal care visits and report fewer illnesses and reported less health expenditures. Moreover, CBHI enrolment was also associated with reduced health costs. We recommend that developing countries should facilitate the expansion of community health insurance scheme not only for their contribution to health financing but even more for mortality and morbidity aversion.
    Keywords: Health Economics and Policy, Research Methods/ Statistical Methods
    Date: 2019–01–14
  10. By: Kellie Ottoboni; Jason Poulos
    Abstract: This paper extends a method of estimating population average treatment effects to settings with noncompliance. Simulations show the proposed compliance-adjusted estimator performs better than its unadjusted counterpart when compliance is relatively low and can be predicted by observed covariates. We apply the proposed estimator to measure the effect of Medicaid coverage on health care use for a target population of adults who may benefit from expansions to the Medicaid program. We draw randomized control trial data from a large-scale health insurance experiment in which a small subset of those randomly selected to receive Medicaid benefits actually enrolled.
    Date: 2019–01
  11. By: Nshakira-Rukundo, Emmanuel; Mussa, Essa Chanie; Nshakira, Nathan; Gerber, Nicolas; von Braun, Joachim
    Abstract: Community-based health insurance (CBHI) schemes have emerged as strong pathways to universal health coverage in developing countries. Their examination has largely focussed on their impacts on financial protection and on the utilisation of curative health services. However, very little is known about their possible effect on utilisation of preventive health services and strategies and yet developing countries continue to carry a burden of easily preventable illnesses. To understand if this effect exists, we carry out a cross-sectional survey in communities served by a large CBHI scheme in rural south-western Uganda. We then apply inverse probability weighting of the propensity score to analyse quasiexperimental associations. We find that the probabilities for using long-lasting mosquito nets, vitamin A and iron supplementation and child deworming were significantly increased with participation in CBHI. We postulate that this effect is partly due to information diffusion and social learning within CBHI-participating burial groups. This work gives insight into the broader effects of CBHI in developing countries, beyond financial protection and utilisation of hospital-based services.
    Keywords: Health Economics and Policy, Research Methods/ Statistical Methods
    Date: 2019–01–14
  12. By: Petr Jakubik; Eveline Turturescu (EIOPA)
    Abstract: As a consequence of the ongoing low-yield environment, insurers are changing their business models and looking for new investment opportunities to deliver the required return. This paper focuses on investments in equities and main drivers of their changes in insurers’ portfolios. In this respect, an empirical analysis for a period before and after the Solvency II introduction using both panel and pool regression was conducted. The obtained results suggest that macroeconomic as well as company specific indicators could explain changes in shares of equities in insurers’ portfolios.
    Keywords: insurance, equity investments, Solvency II
    JEL: G11 G12 G22
    Date: 2018–06
  13. By: Lorenzo Danieli; Petr Jakubik (EIOPA)
    Abstract: This article proposes an Early Warning System model composed of macro-financial and company-specific indicators that could help to anticipate a potential market distress in the European insurance sector. A distress is defined as periods in which insurance companies’ equity prices crash and CDS spreads spike simultaneously. The model is estimated using a sample of 43 insurance companies that are listed. Based on a panel binomial logit specification, empirical evidence shows that economic overheating that could be manifested by high economic growth and inflation as well as high interest rates have negative impact on insurance sector stability. At the company level, increasing operating expenses increase the likelihood of distress occurrence.
    Keywords: early warning system, insurance sector, financial distress
    JEL: G01 G12 G22 E44
    Date: 2018–12
  14. By: Gerald D. Jaynes (Department of Economics, Yale University)
    Abstract: I model ?nancial markets that structure decision-making into discrete points separating contract o?ers, applications, and acceptance/denial decisions. Endogenous beliefs about applicants’ risk types emerge as the institutional process extracts private information allowing uninformed ?rms to infer risk qualities by comparing applications of many consumers. Endogenous beliefs and low-risk consumer behavior render truthful disclosure of transactions incentive compatible supporting a unique equilibrium robust to cream-skimming and cross-subsidizing deviations, even under Hellwig’s “secret” policy assumption. In equilibrium each type demands low-risk’s optimal pooling policy and high-risk supplement to full coverage at fair-price. Nonpassive consumers’ belief ?rms are sequentially rational necessary for equilibrium; lemon equilibrium with only high-risk insured possible.
    Keywords: Adverse selection, Sequential rationality, Screening, Signaling, Incentive compatibility, Insurance pooling
    JEL: D82 G22
    Date: 2018–12
  15. By: Alyssa Maccarone; Amy Gehrke; Nancy Clusen
    Abstract: The purpose of this issue brief is to assess how urgent care utilization of non-active duty Prime beneficiaries, who were eligible for the pilot program, compares to other TRICARE and non-TRICARE beneficiaries’ urgent care utilization.
    Keywords: urgent care center, nurse line, TRICARE urgent care policy, military health care
    JEL: I
  16. By: Hector Galindo-Silva; Nibene Habib Some; Guy Tchuente
    Abstract: This paper explores the use of fuzzy regression-discontinuity design in the context where multiple treatments are applied at the threshold. The identification result shows that, under a very strong assumption of equality of treatment probability changes at the cutoff point, a difference in fuzzy discontinuity identify a treatment effect of interest. Using the data from the National Health Interview Survey (NHIS), we apply this identification strategy to evaluate the causal effect of the Affordable Care Act (ACA) on health care access and utilization of old Americans. We find results suggesting that the implementation of the Affordable Care Act has led to an increase in the hospitalization rate of elderly American--5% more hospitalization. It has caused a minor increase of cost-related direct barrier to access to care--3.6% increase in the probability of delaying care for cost reasons. The ACA has also exacerbated cost-related barriers to follow-up and continuity care -- 7% more elderly couldn't afford prescriptions, 7% more couldn't see a specialist and, 5.5% more couldn't afford a follow-up visit -- as result of ACA
    Date: 2018–12
  17. By: Ann S. O’Malley; Eugene C. Rich; Rumin Sarwar; Eli Schultz; W. Cannon Warren; Tanya Shah; Melinda K. Abrams
    Abstract: ACOs use a range of approaches to segment, or group, their sickest and costliest patients by the level of care management they require. By engaging primary care clinicians’ help in subdividing the high-need, high-cost (HCHN) patient population, ACOs can increase the usefulness of results and frontline providers’ willingness to use them.
    Keywords: Accountable Care Organizations, High-Need High-Cost Patients, population segmentation, risk stratification
    JEL: I
  18. By: Bonnie Harvey; Amy Gehrke; Kevin Shang; Nancy Clusen
    Abstract: Using data from the 2015 Health Care Survey of Department of Defense Beneficiaries (HCSDB), this issue brief investigates patients’ experiences selecting specialists, obtaining referrals, and coordinating with PCMs 12 months prior to the survey (per Consumer Assessment of Health Plans and Systems—CAHPS, protocol).
    Keywords: Referrals to Specialists, TRICARE, health maintenance organization, HMO, primary care manager, PCM, health care system
    JEL: I
  19. By: Anna Godøy; Ingrid Huitfeldt (Statistics Norway)
    Abstract: Geographic variation in healthcare utilization has raised concerns of possible inefficiencies in healthcare supply, as differences are often not reflected in health outcomes. Using comprehensive Norwegian microdata, we exploit cross-region migration to analyze regional variation in healthcare utilization. Our results indicate that hospital region factors account for half of the total variation, while the rest reflect variation in patient demand. We find no statistically significant association between the estimated hospital region effects and overall mortality rates. However, we document a negative association with relative utilization-intensive causes of death such as cancer, suggesting high-supply regions may achieve modestly improved health outcomes.
    Keywords: healthcare supply; healthcare demand; healthcare spending; regional variation; health outcomes
    JEL: H51 I1 I11 I13
    Date: 2018–11
  20. By: Ingrid Huitfeldt (Statistics Norway)
    Abstract: Healthcare providers’ response to payment incentives may have consequences for both fiscal spending and patient health. This paper studies the effects of a change in the payment scheme for hospitals in Norway. In 2010, payments for patients discharged on the day of admission were substantially decreased, while payments for stays lasting longer than one day were increased. This gave hospitals incentives to shift patients from one-day stays to two-day stays, or to decrease the admission of one-day stays. I study hospital responses by exploiting the variable size of price changes across diagnoses in a difference-in-differences framework. I find no evidence that hospitals respond to price changes, and capacity constraints do not appear to explain this finding. Results imply that the current payment policy yields little scope for policymakers to affect the healthcare spending and treatment choices.
    Keywords: Provider incentives; hospital reimbursement; price response; capacity constraints
    JEL: H51 H75 I11 I18
    Date: 2018–11

This nep-ias issue is ©2019 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.