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on Insurance Economics |
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Issue of 2019‒07‒29
fifteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Tripathi, Shruti |
| Abstract: | This study examines the factors that influence patient's choice of a hospital when health-care is financed by government funded health insurance scheme. The model is estimated using a multinomial logit applied to about 0.3 million cases of inpatient treatment from one of the state health insurance scheme in India in 2015. This is the first attempt to identify and quantify the impact of individual and hospital specific factors on patient choice for tertiary care under an insurance scheme in India. The results show that in absence of price constraint patients prefer to choose providers believed to be of higher quality in our case private and big public hospitals, bypassing the smaller public hospitals. |
| Keywords: | health insurance, patient's choice, public and private, health care financing, government policy |
| JEL: | I13 I18 |
| Date: | 2018–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87159&r=all |
| By: | Fenge, Robert; Friese, Max |
| Abstract: | Our study compares the efficiency of centralized and decentralized unemployment insurance programs in a state union. We use a model of two countries with collective bargaining for regional gross wages. The labor force and the firms are partially mobile across the member states of the state union, which gives rise to distortive migration incentives. If unemployment insurance is organized centrally, trade unions negotiate inefficiently high wages due to a vertical fiscal externality. The central government generally cannot provide the second-best unemployment insurance as long as migration is costly. In contrast, decentralized unemployment insurance in the member states is second-best irrespective of the degree of mobility and regional asymmetries. Furthermore, efficiency depends on the federal context. If the wage bargaining process on the labor markets is decentralized, then decisions about unemployment insurance made at the state level are superior to centralized public insurance. For the efficiency of a centralized unemployment insurance, it matters whether decisions in related institutions like cooperative wage bargaining are also centralized. |
| Keywords: | unemployment insurance,imperfect labor markets,federal state union,centralization,migration,vertical fiscal externality |
| JEL: | F22 H77 J65 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:roswps:162&r=all |
| By: | Matias, Denise Margaret; Fernández, Raúl; Hutfils, Marie-Lena; Winges, Maik |
| Abstract: | In the face of increasingly frequent extreme weather events, the need to manage climate risk becomes more urgent, especially for the most vulnerable countries and communities. With the aim of reducing vulnerability, climate risk transfer in the form of climate risk insurance (CRI) has been gaining attention in climate policy discussions. When properly designed, CRI acts as a safety net against climate change impacts by providing financial support after an extreme weather event. Two main types of insurance enable payouts: indemnity (traditional) insurance or predefined parameters (index-based) insurance. Individuals, groups, or even governments may take out policies with either type of insurance and receive payouts directly (insurer to beneficiary payout) or indirectly (insurer to aggregator to beneficiary payout). Direct insurance is usually implemented at the micro-level with individual policyholders. Indirect insurance is usually implemented through group contracts at the meso-level through risk aggregators and at the macro-level through the state. While promising, risk transfer in the form of CRI also has its share of challenges. Within the United Nations Framework Convention on Climate Change, the lack of accessibility and afford¬ability of CRI for poor and vulnerable groups have been identified as barriers to uptake. In light of climate justice, asking the poor and climate-vulnerable groups - most of whom do not contribute substantially to anthropogenic climate change - to solely carry the financial burden of risk transfer is anything but just. Employing a human rights-based approach to CRI may ensure that the resilience of poor and climate-vulnerable groups is enhanced in a climate-just manner. Indigenous peoples are some of the poorest and most climate vulnerable groups. Often marginalised, they rarely have access to social protection. The strong communal relationship of indigenous peoples facilitates their participation in community-based organisations (CBOs). CBOs are a suitable vehicle for meso-insurance, in which risk is aggregated and an insurance policy belongs to a group. In this way, CBOs can facilitate service provision that would otherwise be beyond the reach of individuals. Conclusions of this briefing paper draw on a conceptual analysis of meso-insurance and the results of field research conducted in March 2018 with indigenous Palaw’ans in the Philippines. We find that CRI needs to be attuned to the differential vulnerabilities and capacities of its beneficiaries. This is particularly true for poor and vulnerable people, for whom issues of accessibility and affordability need to be managed, and human rights and pro-poor approaches need to be ensured. In this context, meso-insurance is a promising approach when it provides accessibility and affordability and promotes a pro-poor and human rights-based approach of risk transfer by: Properly identifying and involving target beneficiaries and duty-bearers by employing pro-poor and human rights principles. Employing measures to improve the financial literacy of target beneficiaries. Designing insurance models from the bottom up. |
| Keywords: | Armut und Ungleichheit,Klimawandel |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:diebps:192018&r=all |
| By: | Mpuuga, Dablin; Mbowas, Swaibu; Odokonyero, Tonny |
| Abstract: | This brief uses the 2016/17 Uganda National Household Survey (UNHS) and the World Development Indicators (WDI) to show the extent of health insurance coverage for non-communicable diseases (NCDs) such as diabetes, high blood pressure and heart diseases among others. Results indicate that: (i) NDCs affect people of all socio-economic groups; (ii) more Ugandans suffering from NCDs are willing to pay for health insurance, but very few are holders of insurance policies in this regard; (iii) other diseases like malaria are more easily insured compared to NCDs, an indication that the providers of health insurance services are not keen to insure sufferers of NCDs; (iv) there are regional differences in health insurance coverage as well as prevalence of NCDs, with the burden of NCDs more intense in the Bukedi, Busoga and Teso sub-regions, whereas NCDs are least prevalent in Kigezi and Ankole sub-regionsand (v) NCDs are likely to erode gains in poverty reduction at household level, because it is equally high among poor households with the least capacity to afford health insurance. We there by, recommend establishing special screening centres for NCDs in public health facilities especially health center II’s and III’s. This will promote early detection and early treatment hence curbing expensive costs for treating severe and chronic NCDs. Preventive measures need to be emphasized as well. These include regular body exercises and monitored nutrition which all lower the risk of NCDs. We further suggest incorporating and prioritizing NCDs into the proposed national health insurance scheme. |
| Keywords: | Health Economics and Policy, Risk and Uncertainty |
| Date: | 2019–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eprcpb:291797&r=all |
| By: | Rosch, Stephanie D.; Cooper, Joseph C.; Holt, Charles; Sproul, Thomas W.; Tulman, Sarah |
| Keywords: | Risk and Uncertainty |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291273&r=all |
| By: | Torsten Heinrich; Juan Sabuco; J. Doyne Farmer |
| Abstract: | We develop an agent-based simulation of the catastrophe insurance and reinsurance industry and use it to study the problem of risk model homogeneity. The model simulates the balance sheets of insurance firms, who collect premiums from clients in return for ensuring them against intermittent, heavy-tailed risks. Firms manage their capital and pay dividends to their investors, and use either reinsurance contracts or cat bonds to hedge their tail risk. The model generates plausible time series of profits and losses and recovers stylized facts, such as the insurance cycle and the emergence of asymmetric, long tailed firm size distributions. We use the model to investigate the problem of risk model homogeneity. Under Solvency II, insurance companies are required to use only certified risk models. This has led to a situation in which only a few firms provide risk models, creating a systemic fragility to the errors in these models. We demonstrate that using too few models increases the risk of nonpayment and default while lowering profits for the industry as a whole. The presence of the reinsurance industry ameliorates the problem but does not remove it. Our results suggest that it would be valuable for regulators to incentivize model diversity. The framework we develop here provides a first step toward a simulation model of the insurance industry for testing policies and strategies for better capital management. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1907.05954&r=all |
| By: | Addey, Kwame A.; Jatoe, John Baptist D.; Kwadzo, George T-M; Osei-Asare, Yaw; Jatoe, John Baptist D. |
| Keywords: | Agricultural Finance |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290735&r=all |
| By: | Sellars, Sarah C.; Thompson, Nathanael M.; Wetzstein, Michael E.; Bowling, Laura C.; Cherkauer, Keith A.; Frankenberger, Jane R.; Prokopy, Linda S.; Hemler, Michelle R.; Lee, Charlotte I.; Reinhart, Benjamin D. |
| Keywords: | Productivity Analysis |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291193&r=all |
| By: | Kara Contreary; Katharine Bradley; Sandra Chao |
| Abstract: | This guide, which uses examples from recent reforms for adult Medicaid beneficiaries, is intended to support demonstration states by describing best practices in causal inference. |
| Keywords: | 1115 demonstrations, Medicaid, implementation, evaluation, causal inference |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:1814ed988b2f46d9bdfe25e93e6f9964&r=all |
| By: | Richard J. Zeckhauser |
| Abstract: | Ordeals are burdens placed on individuals that yield no direct benefits to others. They represent a dead-weight loss. Ordeals – the most common being waiting time – play a prominent role in health care. Their goal is to direct scarce resources to recipients receiving greater value from them, hence presumed to be more willing to bear an ordeal’s burden. Ordeals are intended to prevent wasteful expenditures given that health care is heavily subsidized, yet avoid other forms of rationing, such as quotas or pricing. This analysis diagnoses the economic underpinnings of ordeals. Subsidies to nursing home versus home care illustrate. |
| JEL: | H21 H24 I13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26041&r=all |
| By: | Yuqing Zhang; Neil Walton |
| Abstract: | We study the application of dynamic pricing to insurance. We view this as an online revenue management problem where the insurance company looks to set prices to optimize the long-run revenue from selling a new insurance product. We develop two pricing models: an adaptive Generalized Linear Model (GLM) and an adaptive Gaussian Process (GP) regression model. Both balance between exploration, where we choose prices in order to learn the distribution of demands & claims for the insurance product, and exploitation, where we myopically choose the best price from the information gathered so far. The performance of the pricing policies is measured in terms of regret: the expected revenue loss caused by not using the optimal price. As is commonplace in insurance, we model demand and claims by GLMs. In our adaptive GLM design, we use the maximum quasi-likelihood estimation (MQLE) to estimate the unknown parameters. We show that, if prices are chosen with suitably decreasing variability, the MQLE parameters eventually exist and converge to the correct values, which in turn implies that the sequence of chosen prices will also converge to the optimal price. In the adaptive GP regression model, we sample demand and claims from Gaussian Processes and then choose selling prices by the upper confidence bound rule. We also analyze these GLM and GP pricing algorithms with delayed claims. Although similar results exist in other domains, this is among the first works to consider dynamic pricing problems in the field of insurance. We also believe this is the first work to consider Gaussian Process regression in the context of insurance pricing. These initial findings suggest that online machine learning algorithms could be a fruitful area of future investigation and application in insurance. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1907.05381&r=all |
| By: | Asongu, Simplice A; Odhiambo, Nicholas M |
| Abstract: | This study investigates the role of insurance in economic growth on a panel of forty-eight countries in Africa for the period 2004-2014. The research question the study seeks to answer is the following: what thresholds of insurance penetration positively affect economic growth in Africa? The empirical evidence is based on Generalized Method of Moments. Life insurance increases economic growth while the effect of non-life insurance is not significant. Increasing both life insurance and non-life insurance has negative net effects on economic growth. From an extended analytical exercise, 4.149 of life insurance premium (% of GDP) is the minimum critical mass required for life insurance to positively affect economic prosperity while 1.805 of non-life insurance premium (% of GDP) is the minimum threshold required for non-life insurance to positively affect economic prosperity. Thresholds are also provided from the Hansen (1999) Panel Threshold Regression technique using a balanced sample of 28 countries. |
| Keywords: | Insurance; Economic Growth |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:uza:wpaper:25592&r=all |
| By: | James D. Reschovsky; Katharine Bradley |
| Abstract: | This guide describes how states can plan the implementation of their section 1115 Medicaid demonstrations to enable rigorous evaluations. |
| Keywords: | Evaluation Design, Implementation, Demonstration Implementation, Section 1115, 1115 Demonstration, 1115 Waiver, quasi-experimental, stepped wedge design, comparison group, regression discontinuity design, factorial design |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7c4bfb55d1aa43d3a037f07820abce36&r=all |
| By: | Merkl, Christian (Friedrich-Alexander-University Erlangen-Nuremberg, CESifo and IZA); Rens, Thijs van (University of Warwick, Centre for Macroeconomics, IZA and CEPR) |
| Abstract: | Firms select not only how many, but also which workers to hire. Yet, in most labor market models all workers have the same probability of being hired. We argue that selective hiring crucially a⁄ects welfare analysis. We set up a model that is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but implications for welfare are di⁄erent for two reasons. First, a hiring externality occurs with random but not with selective hiring. Second, the welfare costs of unemployment are much larger with selective hiring, because unemployment risk is distributed unequally across workers. |
| Keywords: | labor market models ; welfare ; optimal unemployment insurance |
| JEL: | E24 J65 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1210&r=all |
| By: | Neuberger, Doris; Reifner, Udo |
| Abstract: | Usury is a frequent occurrence in consumer credit markets and particularly affects low-income households. Systemic usury exploits poverty by shifting usury into additional products and leveraging usury gains by stringing together individual loan agreements. This paper reviews the economic rationale for usury legislation and on this basis evaluates the European Consumer Credit Directive 2008/48/EC. Systemic usury is a market failure. The most powerful explanations for such failure in consumer credit markets are monopoly power, where the consumer is locked in a bilateral credit relationship, discrimination through risk-based pricing, and negative externalities, where the least solvent borrowers are cross-subsidized by the more solvent ones. Incomplete information of consumers cannot explain systemic usury in credit markets, because even fully informed consumers would be discriminated and trapped into a situation of bilateral monopoly. However, the European Consumer Credit Directive is primarily based on the model of incomplete information, which it seeks to correct by informational duties. As a consequence, usurious practices and products are implicitly acknowledged as legal, which has eroded the national combat against usury. Therefore, this Directive is not effective and must be reformed. |
| Keywords: | discrimination,Consumer Credit Directive,incomplete information,payment protection insurance,overindebtedness,monopoly power,responsible lending,risk-based pricing,usury |
| JEL: | D14 D18 D42 D62 D63 G21 G28 K22 K33 L12 L14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:roswps:161&r=all |