|
on Insurance Economics |
|
Issue of 2019‒11‒04
sixteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Dajung Jun (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne) |
| Abstract: | Due to the low rates of health insurance coverage among young adults, some state governments began mandating health insurance companies to allow adult children to stay on their parents’ health insurance plans. First implemented in 1995, these mandates aimed to increase insurance coverage among young adults. In 2010, the federal government enacted a more comprehensive version of the dependent coverage mandate as part of the Affordable Care Act. These stateand federal-level efforts increased insurance rates for young adults, but they might have also come with unintended consequences for parents. Parents who placed a high value on health insurance for their young adult children might be reluctant to leave jobs with employerprovided health insurance, and employers might offset the mandate-incurred health care costs by reducing other types of employee benefits or earnings. To assess the extent of such consequences, I study the effects of both the state- and federal-dependent health insurance mandates on fathers’ voluntary job separation rates (job-lock and job-push) and changes in their compensation. I observe a significant decrease in the likelihood of voluntary job separation among eligible working fathers aged 45–64 and find weak evidence that the mandates reduced certain fathers’ total monetary compensation. |
| Keywords: | Health Insurance, Government Regulation-Public Health, Job Mobility |
| JEL: | I13 I18 J6 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2019n09&r=all |
| By: | Marie Louise Leroux; Pierre Pestieau; Grégory Ponthière |
| Abstract: | The study of optimal long-term care (LTC) social insurance is generally carried out under the utilitarian social criterion, which penalizes individuals who have a lower capacity to convert resources into well-being, such as dependent elderly individuals or prematurely dead individuals. This paper revisits the design of optimal LTC insurance while adopting the ex post egalitarian social criterion, which gives priority to the worst-o¤ in realized terms (i.e. once the state of nature has been revealed). Using a lifecycle model with risk about the duration of life and risk about old-age dependence, it is shown that the optimal LTC social insurance is quite sensitive to the postulated social criterion. The optimal second-best social insurance under the ex post egalitarian criterion involves, in comparison to utilitarianism, higher LTC benefits, lower pension benefits, a higher tax rate on savings, as well as a lower tax rate on labor earnings. |
| Keywords: | Long-Term Care,Social Insurance,Fairness,Mortality,Compensation,Egalitarianism, |
| JEL: | J14 I31 H55 |
| Date: | 2019–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2019s-23&r=all |
| By: | Jonas Crevecoeur; Katrien Antonio |
| Abstract: | Insurers record detailed information related to claims (e.g. the cause of the claim) and policies (e.g. the value of the insured risk) for pricing insurance contracts. However, this information is largely neglected when estimating the reserve for future liabilities originating from past exposures. We present a flexible, yet highly interpretable framework for including these claim and policy-specific covariates in a reserving model. Our framework focuses on three building blocks in the development process of a claim: the time to settlement, the number of payments and the size of each payment. We carefully choose a generalized linear model (GLM) to model each of these stochastic building blocks in discrete time. Since GLMs are applied in the pricing of insurance contracts, our project bridges the gap between pricing and reserving methodology. We propose model selection techniques for GLMs adapted for censored data to select the relevant covariates in these models and demonstrate how the selected covariates determine the granularity of our reserving model. At one extreme, including many covariates captures the heterogeneity in the development process of individual claims, while at the other extreme, including no covariates corresponds to specifying a model for data aggregated in two-dimensional contingency tables, similar to the run-off triangles traditionally used by reserving actuaries. The set of selected covariates then naturally determines the position the actuary should take in between those two extremes. We illustrate our method with case studies on real life insurance data sets. These case studies provide new insights in the covariates driving the development of claims and demonstrate the accuracy and robustness of the reserving methodology over time. |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1910.12692&r=all |
| By: | Sebastian Bauhoff (Center for Global Development); Roxanne Oroxom (Center for Global Development) |
| Abstract: | Many governments require individuals to prove their identity to qualify for public programs, which risks excluding beneficiaries who lack identification documents. We examine the effects of an ID requirement introduced in 2011 for Peru's national health insurance program Seguro Integral de Salud. Using a difference-in-differences design and repeated cross-sectional data from a national household survey covering births between 2008 and 2014, we find no measurable effect on service utilization or health outcomes among infants despite significant variation in ID ownership when the requirement went into effect. Possible reasons for the lack of effect include imperfect enforcement of the requirement and various government stop-gaps. |
| Keywords: | identification; Peru; Latin America; health insurance |
| JEL: | I13 I15 I18 |
| Date: | 2019–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:514&r=all |
| By: | Morgan Kelly; Cormac Ó Gráda; Peter Solar |
| Abstract: | Shipping was central to the rise of the Atlantic economies, but an extremely hazardous activity: in the 1780s, roughly five per cent of British ships sailing in summer for the United States never returned. Against the widespread belief that shipping technology was stagnant before iron steamships, in this paper we demonstrate that between the 1780s and 1820s, a safety revolution occurred that saw shipping losses and insurance rates on oceanic routes almost halved thanks to steady improvements in shipbuilding and navigation. Iron reinforcing led to stronger vessels while navigation improved, not through chronometers which remained too expensive and unreliable for general use, but through radically improved charts, accessible manuals of basic navigational techniques, and improved shore-based navigational aids. |
| Keywords: | Shipping; Insurance; Industrial Revolution |
| JEL: | N N73 G22 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:10197/11167&r=all |
| By: | Kalamov, Zarko; Runkel, Marco |
| JEL: | D11 H21 H31 I12 I13 I18 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc19:203620&r=all |
| By: | Vijaya Ramachandran (Center for Global Development); Junaid Sadiq Masood (Center for Global Development) |
| Abstract: | There are several efforts underway in the Pacific Islands to insure public and private assets against natural disasters such as cyclones and earthquakes. These efforts are designed to mitigate the annual costs of such disasters which range from a few percent to over 50 percent of GDP. However, insurance is not a substitute for aid. Most islands are heavily aid dependent and cannot afford to pay the high premiums associated with disaster risk insurance. Insurance to cover disaster risk likely needs to be subsidized to offset costs and to build trust. Governments and donors must also manage basis risk which can be substantial. Over time, investments in resilient infrastructure, coupled with a more comprehensive approach to risk management, may reduce costs and shift premiums to recipients. Finally, current and proposed schemes which provide insurance cover or other products must provide information in a transparent manner on effective demand along with costs, benefits and administrative fees. A clearly defined exit strategy is necessary if funds are not disbursed in a timely manner. |
| Keywords: | disaster risk, finance, insurance, Pacific Islands |
| JEL: | G0 O1 O2 |
| Date: | 2019–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:516&r=all |
| By: | Kuncl, Martin; Ahnert, Toni |
| JEL: | G01 G21 G28 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc19:203565&r=all |
| By: | Kerndler, Martin |
| JEL: | C33 D22 J33 J41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc19:203493&r=all |
| By: | Asenjo, Antonia.; Pignatti, Clemente. |
| Keywords: | 1, 2, 3 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995045193402676&r=all |
| By: | International Monetary Fund |
| Abstract: | This pilot assessment of the implementation of the Key Attributes of Effective Resolution Regimes for Financial Institutions (KA)1 in the insurance sector in France has been completed as part of a Financial Sector Assessment Program (FSAP) undertaken by the International Monetary Fund (IMF) during 2018–19. It reflects the regulatory framework and arrangements in place as of the date of the completion of the assessment. The assessment of the effectiveness of the insurance resolution framework involves the review of the legal framework and detailed examination of the policies and practices of the resolution authority in relation to the KAs pursuant to the Key Attributes Assessment Methodology for the Insurance Sector (Methodology).2 |
| Date: | 2019–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/328&r=all |
| By: | International Monetary Fund |
| Abstract: | The Thai insurance sector is a relatively small but growing part of the country’s financial services industry. Insurance sector assets have grown from 10 percent of gross domestic product (GDP) in 2006 to over 22 percent of GDP in 2016, constituting 9 percent of total financial industry assets. Similarly, between 2008 and 2017, gross premiums written have grown at an average annual rate of approximately 16.9 percent, substantially above nominal GDP growth of 9.9 percent during the same period. As a result, the insurance penetration ratio (the ratio of premiums written to GDP) has gradually increased from 3.63 percent in 2008 to 5.39 percent in 2017. |
| Date: | 2019–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/320&r=all |
| By: | International Monetary Fund |
| Abstract: | The French insurance industry is the largest in the EU27 and therefore the largest in the European Union after Brexit. The French insurance market is large both because the French economy is the second largest in the EU27 and because insurance is a significant part of the French economy. France has a very high level of insurance penetration, particularly for life insurance. There are 742 insurers in the insurance industry. This large number of insurers creates a diverse and competitive market. There are 339 insurers subject to Solvency II with less than EUR 1 billion in assets. It appears these small insurers are well capitalized with all exceeding a 100 percent SCR even if the transitional measures in Solvency II and the long-term guarantee package are not taken into account. Given the diversification benefits embedded in Solvency II capital requirements and the challenging environment of prolonged low interest rates, the presence of many independent small entities will have an impact on the overall efficiency and cost of delivering products to policyholders in the market. |
| Date: | 2019–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/323&r=all |
| By: | Koru, Bethelhem |
| Abstract: | What is the optimal size and composition of Rural Financial Cooperatives (RFCs)? With this broad question in mind, we characterize alternative formation of RFCs and their implications in improving rural households’ access to financial services, including savings, credit and insurance services. We find that some features of RFCs have varying implications for delivering various financial services (savings, credit and insurance). We find that the size of RFCs exhibits nonlinear relationship with the various financial services RFCs provide. We also show that compositional heterogeneity among members (including diversity in wealth) is associated with higher access to credit services, while this has little implication on households’ savings behavior. Similarly, social cohesion among members is strongly associated with higher access to financial services. These empirical descriptions suggest that the optimal size and composition of RFCs may vary across the domains of financial services they are designed to facilitate. These pieces of evidence provide some suggestive insights on how to ensure financial inclusion among smallholders, a pressing agenda and priority of policy makers in developing countries, including Ethiopia. The results also provide some insights into rural microfinance operations which are striving to satisfy members’ demand for financial services. |
| Keywords: | Agricultural Finance, Financial Economics |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae19:295188&r=all |
| By: | International Monetary Fund |
| Abstract: | France is home to numerous banks and insurers which are very active at a global scale. Four Global Systemically Important Banks (G-SIBs) are incorporated in France as well as multiple number of large insurers. Assets of banking system exceed GDP by 2.7 times. Four G-SIBs dominate France’s financial landscape, also taking into account bancassurance (i.e., banking and insurance companies working under financial conglomerate structure) business model they have. Global presence and diversification, integration of banking and insurance activities defined the perimeter and scope of systemic risk assessment (including stress testing) of FSAP. This technical note contributes to the FSAP’s assessment of systemic risk with a comprehensive set of stress testing exercises. The assessment is based on stress tests, which simulate the health of banks, insurers under severe yet plausible (counterfactual) adverse scenarios. Scenarios include global and regional financial market turmoil (shocks to term and risk premiums), a major slowdown of economic activity in Euro Area (EA) and France due to secular stagnation and trade shocks. The analyses include simulations based on solvency and liquidity scenarios. |
| Date: | 2019–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/322&r=all |
| By: | J. Michael McWilliams; Laura A. Hatfield; Bruce E. Landon; Michael E. Chernew |
| Abstract: | Evidence of patient and physician turnover in accountable care organizations (ACOs) has raised concerns that ACOs may be earning shared-savings bonuses by selecting for lower-risk patients or providers with lower-risk panels. We conducted three sets of analyses to examine risk selection in the Medicare Shared Savings Program. First, we estimated overall MSSP savings through 2015 using a difference-in-differences approach and methods that eliminated selection bias from ACO program exit or changes in the practices or physicians included in ACO contracts. We then checked for residual risk selection at the patient level. Second, we re-estimated savings with methods that address undetected risk selection but could introduce bias from other sources. These included patient fixed effects, baseline assignment, and area-level MSSP exposure to hold patient populations constant. Third, we tested for changes in provider composition or provider billing that may have contributed to bonuses, even if they were eliminated as sources of bias in the evaluation analyses. We find that MSSP participation was associated with modest and increasing annual gross savings in the 2012-2013 entry cohorts of ACOs that reached $139-302/patient by 2015. Savings in the 2014 entry cohort were small and not statistically significant. Robustness checks revealed no evidence of residual risk selection. Alternative methods to address risk selection produced consistent results but were less robust than our primary analysis, suggesting the introduction of bias from within-patient changes in time-varying characteristics. We find no evidence of ACO manipulation of provider composition or billing to inflate savings. We further demonstrate that exit of high-risk patients or physicians with high-risk patients from ACOs is misleading without considering a counterfactual among non-ACO practices. We conclude that participation in the original MSSP program was associated with modest savings and not with favorable risk selection. These findings suggest an opportunity to build on early progress. Understanding the effect of new incentives and opportunities for risk selection in the revamped MSSP will be important for guiding future program reforms. |
| JEL: | I11 I13 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26403&r=all |