Group Life Insurance Research Articles

Ekonomiczne determinanty popytu na ubezpieczenia na życie – ujęcie regionalne

Insurance has various functions in the economic and social spheres. Life insurance is a specific type of insurance, offered in the form of individual or group insurance. Research on insurance market at regional level is undertaken relatively rarely. The aim of the study presented in this paper is to identify economic factors determining the level of demand for individual and group life insurance on regional insurance markets. Dynamic econometric models for panel data (GMM estimator) with demand expressed in gross written premium per capita (life insurance density) have been used in the analysis. The research was carried out on the basis of data at voivodship level for the period of 2017–2021 from Statistics Poland and the Polish Financial Supervision Authority. The regression analysis demonstrated that an improving economic situation of the region and households’ growing disposable income positively affected demand for life insurance, while a poor situation on the labor market (indicated by the unemployment rate) had a reverse effect. Individual insurance demand responded stronger to changes in disposable income and the unemployment rate, whereas group insurance demand was more sensitive to changes in the region's economic situation. The level of insurance consumption observed in a given period is determined by that observed in the previous period, which indicates the phenomena occurring on this market are of a relatively stable character.

A Gloss to the Judgment of the Court of Justice of the European Union of 2 February 2023, C-208/21 on Unfair Commercial Practices with Reference to the Information Disclosure in ‘Unit-Linked’ Life Assurance Contracts

The subject of this gloss is the judgment of the Court of Justice of the European Union (CJEU) of 2 February 2023, C-208/21 on unfair commercial practices with reference to the information disclosure in life assurance contracts linked to investment funds, called unit-linked life insurance. The judgment contains guidelines on information disclosure in this insurance by entities that prepare and distribute such insurance products. The issue is of vital importance for insurance industry and has not been unambiguously defined either in legal regulations or in judicial decisions. Rather than addressing all the questions referred to the Court of Justice, the gloss concentrates on entities responsible for communicating the information to the consumers before they accede to unit-linked group life insurance contracts

Adverse selection in the group life insurance market

AbstractThe employer‐sponsored life insurance (ESLI) market is susceptible to adverse selection due to community‐rated premiums, guaranteed issue coverage, and the existence of an individual market. Using payroll and healthcare claims data from a large university, we find that employees with worse health are more likely to elect coverage causing adverse selection in supplemental ESLI. Nonetheless, we find employees typically do not increase coverage following a severe illness even when they can without providing evidence of insurability. Furthermore, demand estimation shows employees are not price‐sensitive and estimated increases in premiums from adverse selection are unlikely to cause significant welfare loss.

In Case You Haven't Heard…

Fully 73% of Generation Z employees and 74% of millennial employees have utilized mental health benefits offered by their employers, while 58% of Generation X employees and 49% of baby boomer employees have used the benefits, the news release service, Business Wire, reported on March 6. Securian Financial, a leading provider of group life and supplemental health insurance benefits, conducted a survey of 2,500 employees of American organizations between Aug. 30 and Sept. 9, 2022. Among the findings, Gen Z, the youngest generation of professionals who are still early in their careers or just entering the workforce, expect access to mental health services and any historical barriers to access to be fixed already. Leveraging mental wellness resources is normalized for this generation. Millennials were raised to believe mental health challenges are problematic but fixable. They're inclined to have the attitude of rolling up their sleeves and getting to work. Gen X recognizes access to mental health services can be problematic but just tries to get through it. Baby boomers, the oldest generation with representation still in the workforce, were taught to tough it out and not talk about mental health challenges.

Current Issues in South African Group Life Insurance

Current Issues in South African Group Life Insurance

Adverse Selection in the Group Life Insurance Market

Adverse Selection in the Group Life Insurance Market

Adverse Selection in the Group Life Insurance Market

Adverse Selection in the Group Life Insurance Market

Farmers’ work-related social security in Finland, implemented by Mela

Mela is the Farmers’ Social Insurance Institution of Finland (in Finnish: Maatalousyrittäjien eläkelaitos) founded in 1969. It provides comprehensive pension cover and social security to farmers, reindeer herders, fishermen, forest owners and recipients of scientific or artistic grants and scholarships living in Finland. In addition to providing pension insurance (MYEL), Mela provides its customers: statutory occupational accident insurance, leisuretime accident insurance, Mela sickness allowance, occupational rehabilitation, group life insurance, and farm closure support for farmers and reindeer herders. It also administers the farmers’ holiday and stand-in scheme, and provides advisory services related to occupational safety and wellbeing at work. The social security provided by Mela was originally addresses to farmers, reindeer herders, fishermen, forest owners. Since 2009 also recipients of scientific and artistic grants/scholarships are Mela’s customers. This article presents the most important stages in the development of social insurance for agricultural entrepreneurs in Finland and the evolution of this system until today. It also explains different benefits offered by Mela and the rules of being subject to social insurance by Mela, as well as the financial economy of Mela, including Mela’s sources of revenue. Finally, it presents tailored programmes and actions offered by Mela to the insured.

Osnovne karakteristike tontine osiguranja

Tontine insurance is tied to life insurance. This type of insurance is also a type of mutual insurance. However, we must look at tontines separately, having in mind its origin and goal. Tontine insurance originated in the 17th century and was developed in England and the United States, until the beginning of the 20th century, when it became banned. Tontine insurance at an early stage contained elements of group annuity insurance, group life insurance and lottery. Today, tontine insurance is a type of fund within which policyholders, i.e., members, agree to jointly capitalize, i.e., finance their contributions to the fund and to divide the capitalized assets between those policyholders who reach a certain age and the heirs of the deceased insured. The Act on Insurance of the Republic of Serbia also regulates tontine insurance. The author pays attention to the provisions of EU law in this area.

Identification of differences between group and individual life insurance for employees

Group life insurance for employees is one of numerous voluntary insurance products covering employees’ personal risks. It can be an important complement to mandatory insurance arrangements (especially social insurance schemes) that provide personal coverage for workers. While employees may take out their life insurance on an individual basis, employer-offered group life insurance is an attractive alternative. Joining a group insurance plan is an employee’s individual decision that should be taken based on his or her knowledge of the terms of coverage. The purpose of this article is to point out the differences between employee group life coverage and individual life insurance, with a particular emphasis on insurance funding aspects and how they affect certain aspects of relevance to employees.

Experience rating in the classic Markov chain life insurance setting

We consider experience rating in the classic Markov chain life insurance setting. We focus on shrinkage estimation of group effects in an empirical Bayes and multivariate frailty extension, building on ideas from group life insurance and survival and event history analysis. Within this framework, we provide insights regarding the structure of the likelihoods and sufficiency of summary statistics such as occurrences and exposures. Simple shrinkage estimators, given by well-known credibility formulas, are obtained under quadratic loss for mutually independent conjugate Gamma priors. The applicability of these simple shrinkage estimators for disability insurance is illustrated in a numerical example using simulated data.

Piling On – How Provincial Taxation of Insurance Premiums Costs Consumers

Insurance premiums have been taxed by Canadian governments for so long – some provinces and municipalities collected small levies as early as the late 1800s – that they’ve become a fixture rarely discussed in the literature and the financial press. For many years, insurance premium taxes were collected from insurers as an alternative to taxing their profits. But this practice is now long gone since all Canadian governments tax the corporate income of insurance companies, in addition to premium taxes and other taxes and levies. Most insurance consumers do not know that a provincial insurance premium tax (IPT) ranging from 2 percent to 5 percent is levied on their premiums. In addition, five provinces charge a retail sales tax (RST) ranging from 6 to 15 percent on top of the premium taxes for certain types of insurance. In Quebec and Ontario, the RST rates of respectively 9 and 8 percent generally apply to group life and health insurance, and property and casualty insurance (although Ontario excludes auto insurance). Saskatchewan is the latest province to introduce an RST. Since insurance is a financial service, premiums are exempt from GST/HST. So why do provinces still tax insurance premiums? While IPTs and RSTs on premiums are largely invisible to customers on whom the burden ultimately falls, they generate more than $7 billion of stable and growing provincial government revenues – representing about 7 percent of all provincial taxes collected on goods and services. Premium-based taxes increase the price of insurance products and lower the demand for them. We find that an increase of one percentage point in the provincial IPT rate leads to a 10 percent decrease in the number of life insurance contracts sold. Reduced insurance coverage for natural disasters such as floods and earthquakes, other catastrophes, relief to a deceased's family, or relief of the financial burden of illness and disability may lead to increased cost pressures on government budgets down the road. Canadian governments should revisit and reassess the taxes imposed on insurance products. At a minimum, IPT liabilities should be made creditable against corporate income tax liabilities, partly restoring their original role as a substitute for taxing profits. And provinces that impose an RST on IPTinclusive premiums should lead the way and eliminate this form of double taxation. A more ambitious reform would remodel the patchwork of transaction taxes for insurance services to a comprehensive and broad-based, value-added system, bringing down the insurance industry's high transaction tax burden and ensuring greater comparability with other industries.

Experience rating with Poisson mixtures

AbstractWe propose a Poisson mixture model for count data to determine the number of groups in a Group Life insurance portfolio consisting of claim numbers or deaths. We take a non-parametric Bayesian approach to modelling this mixture distribution using a Dirichlet process prior and use reversible jump Markov chain Monte Carlo to estimate the number of components in the mixture. Unlike Haastrup, we show that the assumption of identical heterogeneity for all groups may not hold as 88% of the posterior probability is assigned to models with two or three components, and 11% to models with four or five components, whereas models with one component are never visited. Our major contribution is showing how to account for both model uncertainty and parameter estimation within a single framework.

IS THERE ADVERSE SELECTION IN LIFE INSURANCE MARKETS?

AbstractAdverse selection theory predicts people with a high risk of death are more likely to own life insurance. Using a unique data set merging administrative and survey records, we test this theory and find the opposite: people with high death risk are less likely to own life insurance. We postulate advantageous selection and price discrimination swamp adverse selection in individual life insurance markets. To determine which effect is more powerful, we analyze group life insurance markets, where insurance companies cannot price discriminate as well as in individual markets. Our data suggest that price discrimination has a stronger effect than advantageous selection. (JEL D8, G1, I1)

米国の団体生命保険

米国の団体生命保険

The mortality of members of group schemes in South Africa

In this paper, the mortality of members of group schemes underwritten by South African life insurance companies is investigated. The research provides some indication of the level or mortality of this population as a whole, which apart from being useful for costing group schemes in future could be used, to the extent that these data represent the mortality of those in formal employment, in the costing of a national retirement scheme. Rates of mortality are investigated by several demographic factors such as age, sex, salary and industry of employment. Keywords : Mortality; group life insurance; formally employed; group schemes

Modelling the mortality of members of group schemes in South Africa

In this paper, the methodology underlying the graduation of the mortality of members of group schemes in South Africa underwritten by life insurance companies under group life-insurance arrangements is described and the results are presented. A multivariate parametric curve was fitted to the data for the working ages 25 to 65 and comparisons are made with the mortality rates from the SA85-90 ultimate rates for insured lives and the ASSA2008 AIDS and demographic model. The results show that the mortality of members of group schemes is lower than that of the general population, mortality decreasing with increasing salary, as would be expected. For males it was found that there were differences in mortality rates by industry for a given salary band, whereas for females these differences only occurred in the lower salary bands. Furthermore, there is evidence of the healthy-worker effect at ages 60 and above, where the mortality rates appear to level off or even decrease as age increases. This contrasts with the mortality rates from the SA85-90 ultimate rates for insured lives and the ASSA2008 AIDS and demographic model, which increase exponentially.

Adverse vs. Advantageous Selection in Life Insurance Markets

Adverse selection theory predicts that people with a high death risk are more likely to purchase life insurance. The advantageous selection hypothesis predicts the opposite. Using a unique dataset merging administrative and survey records we find support for the advantageous selection hypothesis. We exploit variation in risk aversion among consumers and between pricing structures in individual and group life insurance markets to study and identify the relative strength of advantageous and adverse selection forces. We find that the overall negative relationship between risk and coverage is likely due to advantageous selection swamping adverse selection forces.

Cluster Analysis for Anomaly Detection in Accounting Data: An Audit Approach

This study examines the application of cluster analysis in the accounting domain, particularly discrepancy detection in audit. Cluster analysis groups data so that points within a single group or cluster are similar to one another and distinct from points in other clusters. Clustering has been shown to be a good candidate for anomaly detection. The purpose of this study is to examine the use of clustering technology to automate fraud filtering during an audit. We use cluster analysis to help auditors focus their efforts when evaluating group life insurance claims. Claims with similar characteristics have been grouped together and small-population clusters have been flagged for further investigation. Some dominant characteristics of those clusters which have been flagged are large beneficiary payment, large interest payment amounts, and long lag between submission and payment.

HCC Insurance Holdings, Inc.

AbstractInsurance (MIC: SIC: 6331 NAIC: 524126)HCC Insurance Holdings provides property and casualty, surety, and group life, accident and health insurance coverages and related agency and reinsurance brokerage services to commercial customers and individuals. Co. operates primarily in the U.S., the U.K., Spain, Bermuda, Belgium and Ireland. Co. underwrites both on a direct basis, where it insures a risk in exchange for a premium, and on a reinsurance basis, where it insures all or a portion of another insurance company's risk in exchange for all or a portion of the premium. Co. markets its products both directly to customers and through a network of independent and affiliated brokers, producers, agents and third party administrators.