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on Insurance Economics |
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Issue of 2019‒06‒24
fourteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Nizam, Ahmed Mehedi |
| Abstract: | Commercial insurance system acts like a memoryless system in a way that the premiums paid by the policyholders in one accounting period will be of no avail to them during subsequent periods. Here, we argue that if the insurance scheme is implemented as a not-for-profit trust fund (social insurance) instead of a for-profit limited liability company (commercial insurance) then it will effectively and less expensively hedge against unforeseen losses. If the profit of the insurance company is retained instead of being distributed to the stockholders and there is no agency commission then after a certain number of years, all upcoming claims can be addressed from the interest income of the accumulated profit and the policyholders do not need to pay any premium afterwards. Here, we algebraically calculate the time period required to achieve such a perpetual insurance system as the policyholders after a certain period of time, do no longer need to pay any premium in order to get coverage from losses. In the next step, we empirically calculate the required time period to attain a perpetual zero premium insurance scheme for some 20 (twenty) general insurance companies incorporated in Bangladesh. |
| Keywords: | insurance; social insurance; commercial insurance; welfare |
| JEL: | G20 G22 H53 H55 I31 I38 |
| Date: | 2019–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94293&r=all |
| By: | Kondo, Ayako (University of Tokyo) |
| Abstract: | This paper examines the effect of raising Long-term Care Insurance (LTCI) payments on employment and wages of workers in the long-term care (LTC) industry. Specifically, I use the change in the regional premium in 2012 as an exogenous shock to the insurance fee schedule: the change in the unit price of LTCI service ranges from a decrease of 2.8% to an increase of 4.2%. I find no increase in the number of employees in the establishments, registered under the LTCI scheme, in municipalities where the regional premium increased. The earnings and working hours of LTC workers did not increase, either. |
| Keywords: | long-term care insurance, care workers |
| JEL: | I11 J30 J48 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12383&r=all |
| By: | Rujiwattanapong, W. Similan |
| Abstract: | This paper investigates the impact of endogenous unemployment insurance (UI) extensions on the dynamics of unemployment and its duration structure in the US. Using a search and matching model with worker heterogeneity, I allow for the maximum UI duration to depend on unemployment and for UI benefits to depend on worker characteristics. UI extensions have a large effect on long-term unemployment during the Great Recession via job search responses and a moderate effect on total unemployment via job separations. Disregarding rational expectations about the timing of UI extensions implies an overestimation of the unemployment rate by over 2 percentage points. |
| Keywords: | Business cycles; long-term unemployment; unemployment insurance; unemployment duration; rational expectations |
| JEL: | E24 E32 J24 J64 J65 |
| Date: | 2019–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100948&r=all |
| By: | Hansjoerg Albrecher (University of Lausanne; Swiss Finance Institute); Antoine Bommier (ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich); Damir Filipović (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute); Pablo Koch-Medina (University of Zurich - Department of Banking and Finance; Swiss Finance Institute); Stéphane Loisel (University of Lyon 1 - Institute of Finance and Insurance Science (ISFA)); Hato Schmeiser (University of Muenster - Faculty of Economics; University of St. Gallen - I.VW-HSG) |
| Abstract: | This article summarizes the main topics and findings from the Swiss Risk and Insurance Forum 2018. That event gathered experts from academia, insurance industry, regulatory bodies, and consulting companies to discuss the challenges arising from the impact of data science and, more generally, of digitalization to the insurance sector. |
| Keywords: | venture |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1926&r=all |
| By: | Chemeris, Anna; Ker, Alan P. |
| Abstract: | Innovation in the agricultural sector will determine our ability to reduce food insecurity and feed nine billion people by 2050. Concomitantly, most of the world's agricultural crop production is produced under heavily subsidized insurance. Changes in food security will be largely driven by the nexus of innovation, climate change, and the policy institutions under which production agriculture operates. In the United States, crop insurance subsidies increased from 30% to 60% between 1994 and 2000, bringing about a significant increase in program participation. We use this increase as a natural experiment (event) to empirically estimate the impact of insurance subsidies on rates of technological change and measures of yield resiliency in corn (maize) yields. Our event results indicate that subsidies caused an increase in the rates of technological change and, more surprisingly, an increase in yield resiliency measures. However, point identification fails if there exist any confounding variables. Therefore, we use the spatial heterogeneity in our estimated event parameters to identify causal effects from three sources: introduction of genetically modified seeds, changing climate, and insurance subsidies themselves. Quite interestingly, the increase in the rates of technological change dissipates and the yield resiliency effect is reversed (consistent with theory). Furthermore, we find that the positive effects of genetically modified seeds dominate the effects from both changing climate and increased subsidies. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2019–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uguiwp:290308&r=all |
| By: | Mitman, Kurt (Stockholm University); Rabinovich, Stanislav (University of North Carolina, Chapel Hill) |
| Abstract: | Countercyclical unemployment benefit extensions in the United States act as a propagation mechanism, contributing to both the high persistence of unemployment and its weak correlation with productivity. We show this by modifying an otherwise standard frictional model of the labor market to incorporate a stochastic and state-dependent process for unemployment insurance estimated on US data. Accounting for movements in both productivity and unemployment insurance, our calibrated model is consistent with unemployment dynamics of the past 50 years. In particular, it explains the emergence of jobless recoveries in the 1990's as well as their absence in previous recessions, the low correlation between unemployment and labor productivity, and the apparent shifts in the Beveridge curve following recessions. Next, we embed this mechanism into a medium-scale DSGE model, which we estimate using standard Bayesian methods. Both shocks to unemployment benefits and their systematic component are shown to be important for the sluggish recovery of employment following recessions, in particular the Great Recession, despite the fact that shocks to unemployment benefits account for little of the overall variance decomposition. If we also incorporate other social safety nets, such as food stamps (SNAP), the estimated model assigns an even bigger role to policy in explaining sluggish labor market recovery. We also find that unemployment benefit extensions prevented deflation in the last three recessions, thus acting similarly to a wage markup shock. |
| Keywords: | unemployment insurance, business cycles, jobless recoveries |
| JEL: | E24 E32 J65 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12365&r=all |
| By: | ASAI Yukiko |
| Abstract: | This study examines the effects on workers from the labor-demand response to the costs of mandated maternity and parental leave programs. Japan introduced generous parental leave policies in the 1990s, but for many years, firms still had to pay the social insurance payments during leave, amounting to 13 percent of earnings. A series of reforms occurring in 2000, 2001 and 2014 which gradually reduced these costs to zero. This paper uses this quasi-experimental variation in the cost of female employment to measure the labor demand response. I focus on two key outcomes: starting wages of women of child-bearing age and the probability they are hired on permanent contracts. I find that a 100 thousand yen (approximately $1,000 USD) decrease in the costs of employment during leave increases the probability of starting on a permanent contract by 1.6 percentage points, and increases starting pay by 3.3 percent. In contrast with previous studies, the universal social insurance program setting I study allows me to separate the effects of changes in costs from endogenous responses by workers and firms to the available benefits. These findings have important implications for other countries mandating similar benefit schemes. |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:19024&r=all |
| By: | Richard Murphy |
| Abstract: | This paper provides evidence for why individuals join unions instead of free-riding. I model membership as legal insurance. To test the model, I use the incidence of news stories concerning allegations against teachers in the UK as a plausibly exogenous shock to demand for such insurance. I find that, for every five stories occurring in a region, teachers are 2.2 percentage points more likely to be members in the subsequent year. These effects are larger when teachers share characteristics with the news story and can explain 45 percent of the growth in teacher union membership between 1992 and 2010. |
| Keywords: | unions, teachers, media, insurance |
| JEL: | J51 J45 J32 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1625&r=all |
| By: | Murray, Tim |
| Abstract: | Many retirees retain housing equity and do not utilize it to help finance spending on consumption. In this paper, I examine how older Americans (age 55+) may engage in precautionary savings where households would sell their house in the event they face an increase in out-of-pocket medical expenses due to a health shock. Using a counterfactual experiment, I find that older households are 13-percentage points less likely to own a home in their late retirement years when they know they will not have any out-of-pocket medical expenses. This indicates that many older households prefer not to own a home but choose to do so knowing they may get sick and thus are engaging in precautionary savings using their house. I conduct a policy experiment to examine how an insurance policy that would cover all out-of-pocket medical expenses would impact home ownership. I find that when an insurance policy of this nature is offered that costs four percent of income, the baseline economy has the same homeownership and moving rates as the counterfactual experiment where households do not have to pay for out-of-pocket medical expenses. This suggests that if seniors had more adequate health care coverage, they would be more willing to use the equity in their house to increase consumption in retirement. |
| Keywords: | housing, equity, precautionary savings, Medicare, insurance |
| JEL: | D14 E13 E21 R21 R31 |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94463&r=all |
| By: | Mosadegh Sedghy, Bahareh; Tamini, Lota Dabio; Lambert, Remy |
| Abstract: | Aims: This study examines the supply response of corn in the province of Quebec. Study Design: A time series design is implemented. Place and Duration of Study: Our analysis covers the period from 1985 to 2013 and uses the data of corn production in the province of Quebec. Methodology: A generalised autoregressive conditional heteroskedasticity (GARCH) process is used to model output price expectations and its volatility. Results: We found that application of the Farm Income Stabilisation Insurance in Quebec neutralises the adverse effects of price volatilities on corn production and generates a market power for corn producers. The change in the producers' attitude towards risk is other implication of the insurance program. Conclusion: These results imply that implementation of the insurance program in the province of Quebec leads to an increase of corn production and consequently this increase in production can impose more compensation cost (paid by the insurance program) to governments. |
| Keywords: | Keywords: Price volatility; GARCH; corn supply response; effective price; market price, ASRA. |
| JEL: | Q11 |
| Date: | 2018–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93816&r=all |
| By: | Laura D. Quinby; Gal Wettstein |
| Abstract: | To curb rising Medicaid costs at the federal level, a number of recent policy proposals suggest capitation financing, under which program costs are fixed per beneficiary. This study examines to what extent more generous capitated federal subsidies would likely cause states to increase Medicaid enrollment. To answer this question, the analysis identifies a component of Medicaid that currently relies on capitation financing – the clawback provision in Medicare Part D – and uses that provision to estimate state responses to capitation rates. Specifically, the clawback requires states to pay the federal government a lump sum for each Medicaid enrollee who is also eligible for Medicare (dual-eligible). The size of the lump sum varies across states, based on a historical artifact: state-level prescription drug spending for dual-eligibles in 2003. Thus, the price of enrollment in any year after 2006, when Part D went into effect, is exogenous conditional on the 2003 price. The analysis shows that this within-state rigidity in the clawback formula creates substantial transfers between the federal government and the states, as well as among the states. It further finds that increasing clawback payments per dual-eligible by $100 would lead to a 2-percentage-point decrease in the share of dual-eligibles enrolled in Medicaid. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2019-9&r=all |
| By: | Galarza, Monserrath Ximena Lascano |
| Abstract: | This research aims at investigating the impacts of food assistance programmes on the resilience to food insecurity of the beneficiary household under the World Food Programme (WFP) and Oxfam America’s (OA) project “The R4 Rural Resilience Initiative” implemented in rural and vulnerable areas of Malawi during the period 2015-2016. The empirical analysis uses the Resilience Index Measurement and Analysis II (RIMA-II) methodology of the Food and Agriculture Organization (FAO) and a reflexive method for impact evaluation. RIMA II analysis reveals positive relationships between programme interventions and higher levels of food security and resilience. The impact analysis shows positive impacts of the R4 rural initiative, demonstrating an improvement of the resilience, food security, access to loans and insurance, and in savings. The final conclusion is that food assistance programmes enhanced the beneficiary households’ resilience to food insecurity. |
| Keywords: | Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty |
| Date: | 2019–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc19:289674&r=all |
| By: | Mehdi Touat (B2PHI - Biostatistique, Biomathématique, Pharmacoépidémiologie et Maladies Infectieuses - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Institut Pasteur [Paris] - INSERM - Institut National de la Santé et de la Recherche Médicale, UVSQ - Université de Versailles Saint-Quentin-en-Yvelines, Institut Pasteur [Paris]); Marion Opatowski (B2PHI - Biostatistique, Biomathématique, Pharmacoépidémiologie et Maladies Infectieuses - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Institut Pasteur [Paris] - INSERM - Institut National de la Santé et de la Recherche Médicale, UVSQ - Université de Versailles Saint-Quentin-en-Yvelines, Institut Pasteur [Paris]); Christian Brun-Buisson (B2PHI - Biostatistique, Biomathématique, Pharmacoépidémiologie et Maladies Infectieuses - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Institut Pasteur [Paris] - INSERM - Institut National de la Santé et de la Recherche Médicale, UVSQ - Université de Versailles Saint-Quentin-en-Yvelines, Institut Pasteur [Paris]); Kristel Cosker (Service de Biostatistique Santé Publique et Information Médicale [CHU Pitié-Salpêtrière] - APHP - Assistance publique - Hôpitaux de Paris (AP-HP) - CHU Pitié-Salpêtrière [APHP]); Didier Guillemot (B2PHI - Biostatistique, Biomathématique, Pharmacoépidémiologie et Maladies Infectieuses - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Institut Pasteur [Paris] - INSERM - Institut National de la Santé et de la Recherche Médicale, UVSQ - Université de Versailles Saint-Quentin-en-Yvelines, Institut Pasteur [Paris]); Jerome Salomon; Philippe Tuppin; Grégoire de Lagasnerie; Laurence Watier (B2PHI - Biostatistique, Biomathématique, Pharmacoépidémiologie et Maladies Infectieuses - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Institut Pasteur [Paris] - INSERM - Institut National de la Santé et de la Recherche Médicale, UVSQ - Université de Versailles Saint-Quentin-en-Yvelines, Institut Pasteur [Paris]) |
| Abstract: | Background and Objective: Antimicrobial resistance (AMR) has become one of the biggest threats to global public health given its association with mortality, morbidity and cost of health care. However, little is known on the economic burden of hospitalization attributable to AMR from a public health insurance perspective. We assessed the excess costs to the French public health insurance system attributable to AMR infections in hospitals. Methods: Bacterial infectious disease-related hospitalizations were extracted from the National health data information system for all stays occurring in 2015. Bacterial infections, strains, and microbial resistance were identified by specific French ICD-10 codes. Information about health care expenditure, co-morbidities and demographic characteristics (i.e. gender, age) are provided. We used a matched case–control approach to determine the excess of reimbursements paid to stays with AMR compared to stays with an infection without resistance. Cases and controls were matched on gender, age, Charlson comorbidity index, category of infection, infection as principal diagnosis (two classes), microorganism and hospital status. The overall AMR cost was extrapolated to stays with AMR and excluded from the sample (multiple infections), and a second extrapolation was performed to consider stays with unknown resistance status. Results: The final sample included 52,921 matched-pairs (98.2% cases). Our results suggest that AMR overall cost reached EUR109.3 million in France with a mean of EUR1103 per stay; extrapolation to the entire database shows that the overall cost could potentially reach EUR287.1 million if all cases would be identified. The mean excess length of hospital stay attributable to AMR was estimated at 1.6 days. Conclusion: AMR causes substantial cost burden in France for the public health insurance. Our study confirms the need to reinforce programs to prevent AMR infection and thereby reduce their economic burden. |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02155087&r=all |
| By: | Den Haan, Wouter J.; Rendahl, Pontus; Riegler, Markus |
| Abstract: | The interaction of incomplete markets and sticky nominal wages is shown to magnify business cycles even though these two features – in isolation – dampen them. During recessions, fears of unemployment stir up precautionary sentiments which induces agents to save more. The additional savings may be used as investments in both a productive asset (equity) and an unproductive asset (money). The rise in demand for the unproductive asset has important consequences. In particular, the desire to hold money puts deflationary pressure on the economy which, provided that nominal wages are sticky, increases labor costs and reduces firm profits. Lower profits repress the desire to save in equity, which increases (the fear of) unemployment, and so on. This is a powerful mechanism which causes the model to behave differently from its complete markets version. In our framework, the deflationary pressure yields a mean- reverting reduction in the price level, which implies an increase in expected inflation and a decrease in the expected real interest rate even if the policy rate does not adjust. Thus, our mechanism is different from the one emphasized in the zero lower bound literature. Due to the deflationary spiral our model also behaves differently from its incomplete market version without aggregate uncertainty, especially in terms of the impact of unemployment insurance on average employment levels. |
| Keywords: | ES/L500343/1; 649396 |
| JEL: | N0 R14 J01 |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:84625&r=all |