nep-ias New Economics Papers
on Insurance Economics
Issue of 2022‒04‒04
ten papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. Voluntary health insurance markets in France: . Economic rationales and legal mechanisms By Philippe Batifoulier; Anne-Sophie Ginon
  2. Life Insurance, Liquidity Risk, Interest Rates, Fire Sales, Systemic Risk By Christian Kubitza; Nicolaus Grochola; Helmut Gründl
  3. Can insurance catalyse government planning on climate? Emergent evidence from Sub-Saharan Africa By Surminski, Swenja; Barnes, Jonathan; Vincent, Katharine
  4. Estudos de História Empresarial de Portugal - Seguros By Ana Tomás; Nuno Valério
  5. Monetary solidarity in Europe: can divisive institutions become ‘moral opportunities’? By Schelkle, Waltraud
  6. Labor Supply Effects of Survivor Insurance: Evidence from Restricted Access to Survivor Benefits in the Netherlands By Simon Rabaté; Julie Tréguier
  7. Place-Based Consequences of Person-Based Transfer: Evidence from Recessions By Brad Hershbein; Bryan Stuart
  8. Indikator zur regionalen Berufsstruktur auf Ebene der Arbeitsagenturbezirke By Flohr, Matthias; Menze, Laura; Protsch, Paula
  9. Robust Extreme Quantile Estimation for Pareto-Type tails through an Exponential Regression Model By Minkah, Richard; de Wet, Tertius; Ghosh, Abhik
  10. Consumer Bankruptcy, Mortgage Default and Labor Supply By Wenli Li; Costas Meghir; Florian Oswald

  1. By: Philippe Batifoulier (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Anne-Sophie Ginon
    Abstract: In France, there are two types of health insurance: compulsory public health insurance and voluntary private health insurance which is organized as a market. This paper deals with private health insurance. We define the market place (position and scope) according to two criteria. On the one hand, the standardization or differentiation strategies of the insurance companies, which structure competition through quality and innovation. Secondly, the type of pooling (or mutualisation) at work in insurance contracts, distinguishing between commercial pooling and solidarity-based pooling. We draw up a typology of four "ideal-type" market configurations: residual market, educated market, polarized market and autonomous market.
    Date: 2022–02–22
  2. By: Christian Kubitza (University of Bonn, Institute of Finance and Statistics, Adenauerallee 24-42, 53113 Bonn, Germany); Nicolaus Grochola (Goethe University Frankfurt, International Center for Insurance Regulation, Germany.); Helmut Gründl (Goethe University Frankfurt, International Center for Insurance Regulation, Germany.)
    Abstract: Life insurers sell savings contracts with surrender options, allowing policyholders to prematurely withdraw guaranteed surrender values. Surrender options move toward the money when interest rates rise. Hence, higher interest rates raise surrender rates, as we document for the German life insurance sector. Using a calibrated model, we estimate that surrender options would force insurers to sell up to 2% of their investments during an enduring interest rate rise of 25 bps per annum. The resulting price impact depends on insurers' investment behavior. Forced asset sales are amplified by insurers' long-term investments but mitigated by reducing the guarantees on surrender values.
    Keywords: Life Insurance, Liquidity Risk, Interest Rates, Fire Sales, Systemic Risk
    JEL: G22 E52 G32 G28
    Date: 2022–03
  3. By: Surminski, Swenja; Barnes, Jonathan; Vincent, Katharine
    Abstract: This paper explores how climate risk information produced in the context of insurancerelated activities can support public climate adaptation planning. The central contribution is to outline how relevant climate risk information can translate into behaviour change, and the drivers and barriers that influence this in Sub-Saharan Africa. The insurance industry has the potential to catalyse greater use of climate information, either through existing insurance transactions or through capacity building and investment in data sharing and collaboration. We investigate the interplay of climate risk information and insurance processes from two angles: the use of climate risk data by those who provide insurance – with information as an input to the underwriting process; and the catalyst role of insurance for governments to move towards anticipatory climate risk management. We apply a multi-method approach, combining insights from a survey of 40 insurance experts with key informant interviews and document analysis from three complementary case studies: indemnity-based insurance of private assets in South Africa; parametric sovereign risk pool in Malawi; and collaboration on risk analytics and risk management advice (no insurance) in Tanzania. The analysis offers a new perspective on the catalyst role of insurance by focusing on the ways in which political economy factors, particularly incentives and relationships, influence this process. Overall, there appears to be clear scope for a dynamic interaction between insurers and governments where symbiotic use and generation of climate risk information can advance mutual goals. However, that ambition faces many challenges that go beyond availability and suitability of data. Limited trust, unclear risk ownership and/or lack of incentives are key barriers, even if there is risk awareness and overall motivation to manage climate risks. The three cases show the importance of sustained cross-sectoral collaboration and capacity building to increase awareness and utilization of insurance-related climate risk information.
    Keywords: NE/M020010/1 (Kulima) and NE/M020134/1 (UKZN); Grantham Institute
    JEL: L81
    Date: 2022–02–22
  4. By: Ana Tomás; Nuno Valério
    Abstract: This working paper summarizes the evolution of the insurance sector in Portugal, both from the perspective of the regime established by the government, and from the perspective of the main firms that acted in the sector. This is the fourth working paper of a set that already includes working paper no. 68 on the railroad sector, working paper no. 69 on the tobacco sector, and working paper no. 75 on the banking sector, with the final purpose of preparing a Business History of Portugal.
    Keywords: Portugal, insurance sector, insurance firms. JEL classification: G22 seguros — insurance
    Date: 2022
  5. By: Schelkle, Waltraud
    Abstract: How does the inherent norm of integration, notably to share risks among its members in good faith, become a self-sustaining practice? I address this question generally and for a critical case of a divisive institution, i.e. the evolution of sovereign bailout funding in the Euro Area since 2010. Community building between states is a potential outcome of solidaristic practices, reinforced by positive feedback processes. Inspired by Deborah Stone’s [Stone, D. A. (1999). Beyond moral hazard: Insurance as moral opportunity. Connecticut Insurance Law Journal, 6(1), 12–46] work on insurance, I demonstrate that there are social mechanisms at play that favour the secular expansion of risk sharing between states.
    Keywords: crisis; Euro area; insurance; moral hazard; risk-sharing; solidarity; European Research Council under the Synergy Grant number ERC_SYG_2018 Grant no. 810356; as part of the project SOLID – Policy Crisis and Crisis Politics. Sovereignty; Solidarity and Identity in the EU post 2008.
    JEL: E6
    Date: 2022–02–26
  6. By: Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis); Julie Tréguier (Ined)
    Abstract: The ANW reform of 1996 in the Netherlands reduced the eligibility to survivor benefits for cohorts born after 1950. We find an increase in personal income (+23%) and labor force participation (+16%) for the widowers three years after spousal death. We also find an increase in the take up of welfare and disability benefits (+1.5pp +6pp and +6pp, respectively) as a result of the reform. These are the key findings of recent research on the impact of survival insurance on labor market outcomes for widows. In this Discussion Paper, we evaluate the effect of changes in (public) survivor insurance on surviving spouses’ labor supply. We use a natural experiment to estimate the effect: the cut in eligibility for first pillar survivor insurance benefits on the labor supply of widowers, implemented in 1996. The reform considerably reduced eligibility to survivor benefits for individuals born after January 1st, 1950. This provides a clean quasi-experimental setting as it induced a large and discontinuous drop in survivor benefits for adjacent birth cohorts. Using a regression discontinuity approach and high quality administrative data on the full universe of Dutch widows, we estimate the causal effect of survivors benefits on female income and labor force participation, as well as substitution towards other forms of social insurance.
    JEL: D3
    Date: 2022–03
  7. By: Brad Hershbein; Bryan Stuart
    Abstract: This paper studies how government transfers respond to changes in local economic activity that emerge during recessions. Local labor markets that experience greater employment losses during recessions face persistent relative decreases in per capita earnings. However, these areas also experience persistent increases in per capita transfers, which offset 16 percent of the earnings loss on average. The increase in transfers is driven by unemployment insurance in the short run, and medical, retirement, and disability transfers in the long run. Our results show that nominally place-neutral transfer programs redistribute considerable sums of money to places with depressed economic conditions.
    Keywords: recessions; safety net; government transfers
    JEL: E32 H50 R12 R28
    Date: 2022–03–22
  8. By: Flohr, Matthias (Wissenschaftszentrum Berlin für Sozialforschung); Menze, Laura (Bundesanstalt für Arbeitsschutz und Arbeitsmedizin); Protsch, Paula (Univ. Köln ; BIBB)
    Abstract: "The occupational structure differs strongly between regions in Germany. With this FDZ method report, we provide an indicator on the regional occupational structure for re-use. The analyses by Flohr/Menze/Protsch (2020) on the relationship between young people’s occupational aspirations and the regional occupational structure are based on this indicator. For the year 2013, the indicator shows at the level of employment agency districts the percentage of employees subject to social insurance contributions per occupational group (3-digit) of the German Classification of Occupations 2010 (KldB 2010)." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    Date: 2022–03–11
  9. By: Minkah, Richard; de Wet, Tertius; Ghosh, Abhik
    Abstract: The estimation of extreme quantiles is one of the main objectives of statistics of extremes ( which deals with the estimation of rare events). In this paper, a robust estimator of extreme quantile of a heavy-tailed distribution is considered. The estimator is obtained through the minimum density power divergence criterion on an exponential regression model. The proposed estimator was compared with two estimators of extreme quantiles in the literature in a simulation study. The results show that the proposed estimator is stable to the choice of the number of top order statistics and show lesser bias and mean square error. Practical application of the proposed estimator is illustrated with data from pedochemical and insurance industries.
    Date: 2022–03–25
  10. By: Wenli Li (Federal Reserve Bank of Philadelphia); Costas Meghir (Cowles Foundation, Yale University, NBER, IZA, CEPR and IFS); Florian Oswald (SciencesPo, Paris)
    Abstract: We specify and estimate a lifecycle model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven by house price shocks, education specific productivity shocks, and catastrophic consumption events, while bankruptcy is governed by the basic institutional framework in the US as implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and mortgages combined with data from the American Community Survey. We use the model to understand the relative importance of the two chapters (7 and 13) for each of our two education groups that differ in both preferences and wage profiles. We also provide an evaluation of the BAPCPA reform. Our paper demonstrates importance of distributional effects of Bankruptcy policy.
    Keywords: Lifecycle, Bankruptcy, Housing, Mortgage Default, Labor Supply, Consumption, Education, Insurance, Moral hazard
    JEL: G33 K35 J22 J31 D14 D18 D52 D53 E21
    Date: 2022–03

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