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on Insurance Economics |
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Issue of 2022‒05‒30
23 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | International Monetary Fund |
| Abstract: | The regulatory framework for insurance supervision in the United Kingdom is sophisticated and the authorities are leaders in supervisory techniques. Observance with the Insurance Core Principles (ICPs) is very high compared to peers with 17 ICPs observed and only 6 out of 24 ICPs determined to be largely observed and 1 partly observed. |
| Keywords: | solvency ASSESSMENT; ASSESSMENT of observance; ASSESSMENT of insurance core principle; staff team of the International Monetary Fund; insurance solvency coverage; solvency requirement; Insurance companies; Insurance; Solvency; Global |
| Date: | 2022–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2022/109&r= |
| By: | Bert Van Roosebeke (International Association of Deposit Insurers); Ryan Defina (International Association of Deposit Insurers) |
| Abstract: | Deposit insurers operate within an ever-evolving global financial system and hence are subject to change themselves. This report explores some of the key dynamics in the deposit insurance industry and identifies the five emerging issues which are expected to significantly affect the activities of deposit insurers in the near future. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:awl:respap:2202&r= |
| By: | International Association of Deposit Insurers |
| Abstract: | The International Association of Deposit Insurers (IADI) formed a technical committee (TC) to investigate whether differential pricing systems (DPSs) as implemented are effective in meeting their objective(s). The TC considered both the general conditions favourable for an effective DPS and the best techniques for quantitatively evaluating a DPS. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:awl:respap:2006&r= |
| By: | International Association of Deposit Insurers |
| Abstract: | Coverage levels and scope are key components of efficient deposit insurance systems. This paper maps important considerations and practices in this connection by analysing the results of a 2020 IADI survey on the topic. This is complemented by findings from the 2020 IADI annual survey and by case studies provided by selected jurisdictions which detail issues that were identified as unique or novel. The paper ends with specific suggestions about how these findings could inform future revisions of the IADI Core Principles regarding Core Principle 8 - Coverage. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:awl:respap:2112&r= |
| By: | Kumudini Hajra (International Association of Deposit Insurers); Ramadhian Moetomo (International Association of Deposit Insurers) |
| Abstract: | This briefing note explores the different types of depositor preference, the advantages and disadvantages of depositor preference and the issues arising in the context of depositor preference that are relevant for DIs. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:awl:polbri:1&r= |
| By: | Theis Bathke; Marcus Christiansen |
| Abstract: | Forward transition rates were originally introduced with the aim to evaluate life insurance liabilities market-consistently. While this idea turned out to have its limitations, recent literature repurposes forward transition rates as a tool for avoiding Markov assumptions in the calculation of life insurance reserves. While life insurance reserves are some form of conditional first-order moments, the calculation of conditional second-order moments needs an extension of the forward transition rate concept from one dimension to two dimensions. Two-dimensional forward transition rates are also needed for the calculation of path-dependent life insurance cash-flows as they occur upon contract modifications. Forward transition rates are designed for doing prospective calculations, and by a time-symmetric definition of so-called backward transition rates one can do retrospective calculations. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2204.12766&r= |
| By: | Stéphane Auray (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Aurélien Eyquem (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, Université de Lyon) |
| Abstract: | A Tractable HANK (THANK) model with three agents, incomplete markets, unemployment and sticky prices and wages, is used to analyze the dynamics, welfare and distributional effects of Ramsey-optimal unemployment insurance (UI) policies. First, the optimal transition from a steady state that replicates several empirical regularities of the European labor market to the Ramsey steady state is analyzed. In the long run, the vacancy creation motive dominates, as the replacement rate falls, lowering the unemployment rate. In the short run however, the insurance motive dominates until unemployment falls enough to generate larger welfare gains from a lower unemployment rate. Over the business cycle around the Ramseyoptimal steady state, we nd that the optimal changes in the replacement rate depend (i) on the nature of the shock and (ii) on the presence of price and wage rigidities. After productivity shocks, the vacancy creation motive dominates. After separation shocks, the planner has almost no traction over vacancy creations. Only the insurance and aggregate demand stabilization motives remain, and both point to a counter-cyclical UI policy. |
| Keywords: | Incomplete markets,Borrowing constraints,Unemployment,Unemployment Insurance |
| Date: | 2022–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03652789&r= |
| By: | International Association of Deposit Insurers Regional Committee of North America |
| Abstract: | This paper presents the results of a research project conducted by the Canada Deposit Insurance Corporation (CDIC) on behalf of the Regional Committee of North America (RCNA) to analyze the contingency plan testing programs of deposit insurers and resolution authorities in Canada, the United States and Mexico. The contributors to the research project are: the Autorité des marchés financiers (AMF), CDIC, the Federal Deposit Insurance Corporation (FDIC), and the Instituto para la Protección al Ahorro Bancario (IPAB). The project employed qualitative research methodologies, namely, a literature review, survey, and case studies. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:awl:respap:2106&r= |
| By: | Ryan Defina (International Association of Deposit Insurers) |
| Abstract: | Geography plays a fundamental role in today’s interconnected world. Financial flows operate within a multitude of regulatory and supervisory parameters often heavily influenced by regional factors. While deposit insurance is one factor affecting these flows, it too has been influenced by regional factors, particularly in the past 20 years with the rapid growth and development of deposit insurance systems, and has undergone substantial changes as a result. Understanding geographic dynamics in deposit insurance design enables policy makers to better understand the impact of regional factors on the features of deposit insurance systems and vice versa. Correlation between deposit insurer features in neighbouring jurisdictions offers the potential to facilitate collaboration under the grounds of common history and institutional development, but also introduces many challenges to multiple and bilateral coordination. We explore these issues further and highlight considerations for deposit insurance research, training and more targeted technical assistance initiatives. This paper investigates the associations between the features of deposit insurance systems and geography using a relatively simple statistical approach, and quantified through analysis of data collected by IADI. The results focus on a cross-sectional analysis of 2019 Annual Survey results. An implicit assumption is made that relationships observed in 2019 data are broadly representative of the true underlying dynamics between variables of interest and geography, although further analysis incorporating a time dimension would provide clarity on this assumption. Results suggest that geography is an important factor to consider when exploring a range of deposit insurance data items. However, this effect does not play a role for all aspects of deposit insurance systems, and is subject to a number of caveats. In some instances, the age of deposit insurers (a proxy for maturity in system design and implementation) can influence more than the region as a whole. Moreover, sample sizes used are relatively small so this needs to be taken into account when reviewing the results. Future research directions in this area could seek to broaden the suite of data items considered; conduct a targeted follow-up to further unpack the economic, financial, legal and cultural dynamics driving both inter- and intra-regional variation; or explicitly consider temporal dynamics through appraising longitudinal panels of deposit insurance metrics. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:awl:polbri:2&r= |
| By: | Jiamin Yu |
| Abstract: | With the popularity of Telematics and Self-driving, more and more rating factors, such as mileage, route, driving behavior, etc., are introduced into actuarial models. There are quite a few doubts and disputes on the rationality and accuracy of the selection of rating variables, but it does not involve the widely accepted historical claim records. Recently, Tesla Insurance released a new generation of Safety Score-based insurance, irrespective of accident history. Forward-looking experts and scholars began to discuss whether claim history will disappear in the future auto insurance rate-making system. Therefore, this paper proposes a new risk variable elimination method as well as a real-time road risk model design framework and concludes that claim history will be regarded as a "noise" factor and deprecated in the Pay-How-You-Drive model. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2204.11585&r= |
| By: | Haselmann, Rainer; Krahnen, Jan Pieter; Tröger, Tobias; Wahrenburg, Mark |
| Abstract: | This briefing paper describes and evaluates the law and economics of institution(al) protection schemes. Throughout our analysis, we use Europe's largest such scheme, that of German savings banks, as paradigm. We find strengths and weaknesses: Strong network-internal monitoring and early warning seems to be an important contributor to IPS network success. Similarly, the geographical quasi-cartel encourages banks to build a strong client base, including SME, in all regions. Third, the growth of the IPS member institutions may have benefitted from the strictly unlimited protection offered, in terms of euro amounts per account holder. The counterweighing weaknesses encompass the conditionality of the protection pledge and the underinvestment risk it entails, sometimes referred to as blackmailing the government, as well as the limited diversification potential of the deposit insurance within the network, and the near-incompatibility of the IPS model with the provisions of the BRRD, particularly relatingto bail-in and resolution. Consequently, we suggest, as policy guidance, to treat large IPS networks similar to large banking groups, and put them as such under the direct supervision of the ECB within the SSM. Moreover, we suggest strengthening the seriousness of a deposit insurance that offers unlimited protection. Finally, to improve financial stability, we suggest embedding the IPS model into a multi-tier deposit re-insurance scheme, with a national and a European layer. This document was provided by the Economic Governance Support Unit at the request of the ECON Committee. |
| Keywords: | IPS,deposit guarantee scheme,savings banks |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewh:88&r= |
| By: | Helmuth Cremer (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jean-Marie Lozachmeur (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper studies a market for a medical product in which there is perfect competition among health insurers, while the good is sold by a monopolist. Individuals di¤er in their severity of illness and there is ex post moral hazard. We consider two regimes : one in which insurers use coinsurance rates (ad valorem reimbursements) and one in which insurers use copayments (specic reimbursements). We show that the induced equilibrium with copayments involves a lower producer price and a higher level of wel- fare for consumers. This results provides strong support for a reference price based reimbursement policy. |
| Keywords: | Copayments,Health insurance competition,Ex post moral hazard,Imperfect competition |
| Date: | 2022–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03629480&r= |
| By: | James Haven; Deborah Chollet |
| Abstract: | CMS recently granted Medicare Advantage plans greater flexibility to offer supplemental benefits. The scope of these supplemental benefits includes services that address the social determinants of health. In this brief, we examine the offer of supplemental benefits as of early 2022. |
| Keywords: | Medicare supplemental benefits, Special Supplemental Benefits for Chronically Ill (SSBCI), Medicare Advantage, premium benefits, CMS |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9de8dfc3433141f98969b30e3fb0ed91&r= |
| By: | Gabriela Alondra Agafitei (Investigador Junior de INESAD) |
| Abstract: | In 2019, the Bolivian government began implementation of the Universal Health Insurance (SUS) scheme, with critics claiming the unpreparedness of the healthcare system to provide universal and free services. To date, there is no research that assesses the effects of the reform and to what extent it is providing universal, free services. The objective of this study is to fill this research gap by providing a diagnosis on access to public healthcare services after the SUS’s adoption. In this study, access is operationalized according to a theoretical framework developed by the World Health Organization (2010). The study has been conducted according to a combined method that compares data from before and after the SUS approval. First, data from the National Household Survey has been analyzed to provide an overview of dimensions related to access at the macro level. Secondly, the macro perspective is integrated with data collected through semi-structured interviews that provide a detailed analysis of the qualitative dimensions of accessing healthcare at the micro level, which are often not reflected by quantitative indicators. The results showed that on the one hand access to public healthcare services has increased in the first year of the SUS’s implementation compared to previous years. However, despite the supply of additional human resources and physical infrastructure, the sufficiency in availability of human resources remains questionable, as the values disaggregated per 1,000 inhabitants remained roughly the same. Similarly, spending at the macroeconomic level did not reach recommended levels for universal coverage. Data from the case study deepens the understanding of the findings at the macro level. In fact, access appears as characterized by considerable challenges, such as long waiting times, lack of medicines and of beds, and low-quality services that overall restrain access to the public services. The study has concluded that despite the fact that access has increased, insufficiency of resources and the structural characteristics of the Bolivian healthcare system represent severe limitations for the universal outreach of SUS. |
| Keywords: | Universal healthcare, effective access, coverage, insurance. |
| JEL: | I18 J18 D63 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:adv:wpaper:202201&r= |
| By: | Tappi, Marco; Nardone, Gianluca; Santeramo, Fabio |
| Abstract: | The weather index-based insurances may help farmers to cope with climate risks overcoming the most common issues of traditional insurances. However, the weather index-based insurances present the limit of the basis risk: a significant yield loss may occur although the weather index does not trigger the indemnification, or a compensation may be granted even if there has not been a yield loss. Our investigation, conducted on Apulia region (Southern Italy), aimed at deepening the knowledge on the linkages between durum wheat yields and weather events, i.e., the working principles of weather index-based insurances, occurring in susceptible phenological phases. We found several connections among weather and yields and highlight the need to collect more refined data to catch further relationships. We conclude opening a reflection on how the stakeholders may make use of publicly available data to design effective weather crop insurances. |
| Keywords: | climate change, farming system, phenological phase, risk, weather insurance |
| JEL: | G22 Q14 Q18 Q54 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112888&r= |
| By: | Helge Liebert; Beatrice Mäder |
| Abstract: | This paper investigates the returns to health care provision during the mortality transition. We construct a new panel data set covering German municipalities from 1928 to 1936. The endogeneity of health care supply is addressed by using the expulsion of Jewish physicians from statutory health insurance as exogenous variation in regional physician supply. Increases in the supply of physicians reduce infant mortality and mortality from common childhood diseases. Using a semiparametric control function approach, we find diminishing marginal returns to health care provision. The results are consistent with historical trends in infant mortality over the 20th century. |
| Keywords: | infant mortality, physicians, health care supply, mortality transition, semiparametric IV |
| JEL: | I10 I18 N34 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9699&r= |
| By: | International Monetary Fund |
| Abstract: | The FSAP started in an important macro-financial phase right after the second Covid wave and a third lockdown. The balance sheet resilience of major institutional sectors was at the center of policy considerations. Against this backdrop, the FSAP analyzed the pandemic’s potential “scarring” of banks, insurers, corporates, and households balance sheets, focusing on the interplay of macro-financial/structural conditions and financial vulnerabilities. |
| Keywords: | bank solvency stress test result; fair value; resolvability Assessment framework; D. solvency stress tests result; feedback effect; Macroprudential solvency stress tests; Mortgages; Insurance companies; Stress testing; Insurance; Credit; Global |
| Date: | 2022–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2022/102&r= |
| By: | Kotschy, Rainer (Harvard School of Public Health); Bloom, David E. (Harvard University) |
| Abstract: | This paper investigates challenges of aging for long-term care. Our analysis proceeds in three steps. In the first step, we estimate the prospective care demand for 30 developed countries based on projected aging and disabilities among the elderly. In the second step, we outline challenges for care systems with respect to shortages of care workers, increasing skill requirements for care workers, barriers to universal and equitable access to care, and cost containment subject to adequate care quality. In the third step, we identify solutions for these challenges by comparing the care systems of Germany, Israel, Japan, the Netherlands, and South Korea. |
| Keywords: | long-term care insurance, population aging, care demand, ADL, IADL |
| JEL: | I18 I38 H51 H75 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15228&r= |
| By: | Osuagwu, Eze Simpson |
| Abstract: | This paper investigates whether the Affordable Care Act of 2010 adequately provides for preventive care services, which is a major element for the provision of universal healthcare for the American people. The paper relies on a historical review of the provisions of the Act and empirical evidence from literature to conclude that the Affordable Care Act has adequate provisions for preventive care services. The paper therefore suggests that policy makers should expand the enrollment period to accommodate individuals who may not be able to register within the enrolment period but may stand in need of a comprehensive periodic care, especially pregnant women who need prenatal care during the term of their pregnancy. The paper also recommends that those states yet to establish exchanges should set aside political differences, to enable the citizens take appropriate steps to benefit from the preventive care services provided by the healthcare program. The paper then concludes that the universality of the Affordable Care Act implies a good implementation of preventive care services. |
| Keywords: | Affordable Care Act, Preventive Care, Healthcare Services, United States |
| JEL: | I15 I18 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112946&r= |
| By: | Malgorzata Iwanicz-Drozdowska (SGH-Warsaw School of Economics, Poland); Å ukasz Kurowski (SGH-Warsaw School of Economics, Poland); Bartosz Witkowski (SGH-Warsaw School of Economics, Poland) |
| Abstract: | This paper aims to evaluate the role of depositor-specific features in the behaviour of depositors in bank resolution processes. The study is based on a telephone interview conducted with 1,000 Poles, including customers of banks that have undergone resolution in recent years and basic statistics of resolved banks. We empirically verified which factors were significant for the decision on deposit non-withdrawal, which helps to avoid bank runs. Our findings indicate that trust in public institutions and the experience gained with age play a key role in overall depositors’ behaviour. However, for resolutions, declared trust is replaced by objective, case specific trust based on information about the resolution process and its consequences. |
| Keywords: | deposit insurance, bank resolution |
| JEL: | G21 G33 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:awl:spopap:1&r= |
| By: | International Monetary Fund |
| Abstract: | The CBvCSM is the sole supervisory authority for all regulated financial institutions operating locally and in the offshore (or international) sector, as well as the stock exchange in Curacao and St Maarten. The financial sector comprises different types of institutions, which include banks and non-bank institutions, insurance companies (both Life, and Non-life), securities intermediaries, asset management firms, investments institutions, fund administrators, management of pension funds, reinsurers, and trust companies. |
| Date: | 2022–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2022/088&r= |
| By: | Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Matarrese, Marco Maria |
| Abstract: | We have estimated the level of Risk Weighted Assets among 30 countries in Europe, in 30 trimesters, using data of the European Banking Authority-EBA of 139 variables. We perform an econometric model using Pooled OLS, Panel Data with Fixed Effects, Panel Data with Random Effects, Weighted Least Squares. We found that Risk Weighted Assets is negatively associated, among others, to the level of NFC loans in mining and quarrying, in public administration and defence, and in financial and insurance activities and positively associated, among others to distribution of NFC loans in human health services and social work activities, in education and the level of net fee and commission income. Furthermore, we apply a cluster analysis with the k-Means algorithm, and we find the presence of two clusters. A comparison was then made between eight different machine learning algorithms for predicting the value of the RWAs and we found that the best predictor is the linear regression. The RWA value is predicted to increase by 1.5%. |
| Keywords: | Financial Institutions and Services; General; Banks, Depository Institutions, Micro Finance Institutions, Mortgages; Investment Banking, Government Policy, and Regulation |
| JEL: | G0 G20 G21 G24 G28 |
| Date: | 2022–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112924&r= |
| By: | Francesco D'Acunto; Sascha Möhrle; Florian Neumeier; Andreas Peichl; Michael Weber; Sascha Möhrle; Michael Weber |
| Abstract: | Climate change policies have been rising to the top of the global political agenda, but how should governments finance them? Public economists propose solutions based on economic theory, but their political feasibility depends on voters’ support, and ordinary households often neglect economic theory and have different views about efficiency and fairness. We design a large-scale information experiment to assess a representative population’s beliefs about alternative forms of financing. We randomly provide information about which groups contribute more to or benefit from climate change and compare the support for alternative financing schemes across informed and uninformed consumers. Informed consumers strongly support the introduction of a VAT-style CO2 tax after learning that the rich contribute more to climate change than the poor, but do not support increasing taxes on older people when learning that they also pollute more. Moreover, consumers who learn that certain populations, due to luck, gain economically from climate change strongly oppose redistribution from gainers to losers of climate change. Consumers also oppose financing policies to fight climate change via public debt, implying higher costs for future generations. Market-based solutions, such as private insurance for those exposed to climate-change risk, are strongly opposed across the board. |
| Keywords: | climate policy, fiscal policy, taxation, expectations, inequality |
| JEL: | D64 D84 D91 F38 H23 Q54 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9727&r= |