Social Insurance with Competitive Insurance Markets and Risk Misperception* This paper considers an economy where individuals differ in productivity and in risk. Rochet (1991) has shown that when private insurance markets offer full coverage at fair rates, social insurance is desirable if and only if risk and productivity are negatively correlated. This condition is usually shown to be satisfie...

We use the German Socio-Economic Panel (GSOEP) to analyze determinants of the demand for supplemental health insurance covering hospital and dental in Germany. The GSOP dataset provides doctor diagnosed indicators of the individual’s health state, risk attitude, and demand for medical services and insurance purchases in other lines of insurance as well as rich demographical and socioeconomical ...

The regulation of health insurance is an important and often controversial issue. Rules intended to improve access to insurance for high risk consumer have the potential to reduce overall coverage by inducing adverse selection. This paper examines the issue of adverse selection in the context of the market for private health insurance in Australia, where premiums are required to be community ra...

Insurance industry contributes largely to the economy therefore risk management in this industry is very much necessary. In the insurance parlance, the risk management is a tool identifying business opportunities to design and modify the insurance products. Risk can have severe impact in case not managed properly and timely. The mapping of risk management with data mining will help organization...

Insurers have been concerned about surrenders for a long time especially in Saving business, where huge sums are at stake. The emergence of the European directive Solvency II, which promotes the development of internal risk models (among which a complete unit is dedicated to surrender risk management), strengthens the necessity to deeply study and understand this risk. In this paper we investig...

Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. An efficient risk classification system generates premiums that fully reflect the expected cost associated with each class of risk characteristics. This is known as financial equity. In t...

A builder’s “All Risk” insurance policy is the traditional way that the construction industry insures against damage to the work in progress during construction. Despite its common namesake, “All Risk” does not literally mean that all risks of loss or damage are insured. Critical and subtle differences in the forms of all-risk insurance policies can determine whether there is, or is not, insura...

The World Trade Center disaster was a stark reminder to the insurance industry of the potential dire consequences of accumulating high concentrations of insured value and underestimating a hazard to which they are exposed. By imposing strict coverage limits, or stopping to offer terrorism cover for large commercial policies, initial steps can be taken to address the accumulation problem. Subseq...