Purchase Of Insurance Research Articles

Can long-term care partnership programmes increase insurance coverage and reduce Medicaid costs?

ABSTRACT Although long-term care is a substantial financial risk for elderly Americans, only about 10% purchase insurance, with many of the remainder relying on Medicaid. Faced with rising Medicaid expenditure on long-term care, states introduced long-term care partnership programmes in the hope of reducing Medicaid spending by encouraging the purchase of private insurance. Using numerical optimization techniques, we show theoretically that partnership programmes will only modestly increase long-term care insurance coverage. Most of the benefits will go to those who would have purchased non-partnership policies. Thus, the potential costs to Medicaid will exceed the savings.

Exploring the Effect of Policies on Environmental Pollution Liability Insurance in China’s Highly Polluting Industries: Applying Ajzen’s Theory of Planned Behavior

ABSTRACT This paper investigates the effects of different types of government policies related to environmental pollution liability insurance (EPLI) and how these policies promote the demand for EPLI of polluting enterprises. Based on the theory of planned behavior (TPB), we establish a research framework to analyze the effects and mechanisms of the three different policies (mandatory, incentive, and monitoring policies). Our empirical results suggest that the mandatory and monitoring policies can effectively promote companies to buy insurance, but the incentive policies have no significant impact on the insurance demand overall. Furthermore, companies with more positive environmental attitudes are not sensitive to mandatory policies. Although the overall effect of incentive policies is not significant, they have a significant positive impact on the EPLI demand of non-state-owned companies. The monitoring policies prompt enterprises to purchase insurance by strengthening information disclosure and compliant production.

SELECTED DETERMINANTS OF LIFE INSURANCE PURCHASE ACCORDING TO RESPONDENTS

The main purpose of the study was to evaluate selected determinants of life insurance purchase. The subjects of the study were adult individuals, while the subjects were life insurance. The source of data was primarily primary material obtained in 2022-2023 through a questionnaire survey. (104 responses were received). Data were processed using ꭓ2 statistical tests and Kruskal-Wallis nonparametric analysis of variance. Cross-tabulation included analysis of responses by gender, education, place, and monthly net income per person in the household. The mentioned determinants differentiated the responses in a statistically significant way. The results proved that as many as 81% of respondents had one insurance policy. The number of individual insurance policies only slightly exceeded the group form of insurance. Importantly, among the insured there were both old customers (insurance for more than 5 years) and new customers (1 year or up to 1 year). Respondents spend relatively low amounts on premiums but are satisfied with this protection. Factors influencing the purchase of these insurances were the desire to protect relatives in case of death, a general sense of security, the fact of having protection itself, and support in case of illness or invalidity.

Life cycle insurance, bequest motives and annuity loads

We investigate insurance purchases when bequest motives are age-varying and life insurance and life annuities both carry loads. The existing life cycle literature assumes bequests are normal goods without being either necessities or luxuries. Much of the literature also assumes implicitly that life annuity loads are negative. A key finding of the literature is that the demand for life insurance and the demand for life annuities are symmetrical. It is optimal to buy life-contingent insurance throughout life, even under loads. A life annuity phase backs directly onto a life insurance phase. We find that realistic examples with positive loads on both products reveal up to two distinct periods of non-participation, one in midlife and the other adjoining the maximum age. We highlight examples with necessity bequests during child-rearing years and luxury bequests thereafter. This set of assumptions explains why a substantial demand for life insurance during child-rearing years can co-exist with negligible demand for life annuities later on. A realistic 18% load on both products generates this outcome.

Risk Management Effects of Insurance Purchase and Organization Participation: Which Is More Effective?

Insurance purchase and organization participation in risk management is of great practical significance for stabilizing agricultural production and household income. The aims of this study were to analyze farm households’ choices of insurance purchase and organization participation, and their effects on crop revenue and its higher-order moments using the multinomial switching endogenous regression (MESR) model. The results showed that the adoption of insurance and organization was significantly affected by household head characteristics, farm household characteristics, and cropland attributes. Insurance purchase, organization participation, and their joint adoption contributed to the increase in crop revenue and decrease in crop revenue variance, and the benefits were larger when adopting two risk management tools in combination. When skewness was taken into account in risk management analysis, insurance purchase, organization participation, and their joint adoption resulted in a reduction in the probability of crop failure, of which, participating in organizations was the most effective. Efforts should be put forth to improve the functioning and effectiveness of agricultural insurance and organization to promote the adoption of risk management tools.

INSURANCE MARKETING STRATEGIES AND RISK PROTECTION AWARENESS AMONG SME OWNERS IN NORTHERN MALAYSIA

The study examines the effect of 7Ps of service marketing strategies and attitude towards risks on insurance purchase behaviour of SMEs as their risk mitigation and management. Despite the failure risks among SMEs, insurance penetration rates among SMEs are low, showing low risk protection awareness. Insurers need to understand the effectiveness of service marketing strategies in influencing SME owners’ purchase behaviour. The study uses paper-based surveys among 123 SMEs in Northern Malaysia. A set of survey questionnaire was developed based on adoption and adaptation items from existing studies. Data was analysed using PLS-SEM via SmartPLS 3.0. Findings indicated that only five of the service marketing strategies, namely price, promotion, place, process, and physical evidence have significant influence on the insurance purchase behaviour. In addition, attitude towards risks fully mediates all the direct effect of the five Ps, meaning that the SMEs attitude towards risks weakens the effect of all the marketing strategies on the SMEs insurance purchase behaviour. This study makes both theoretical and practical contributions, especially in identifying the roles of external stimuli and internal process in influencing insurance purchase behaviour among SMEs. The findings of the study will provide help to agencies tasked with developing SMEs in enhancing their risks management plan to protect the SMEs in facing the highly uncertain nature of the business; as well as insurers in increasing the penetration rates of insurance among SMEs.

Insurance holdings: Does individual insurance literacy matter?

Using a representative sample and a measure of insurance literacy developed and validated by an insurance supervisor, this study tests the impact of insurance literacy on the holding of insurance products in Italy. We show that insurance literacy influences insurance purchase decisions along with age, marital status, education, employment status, and having children. The greater the literacy, the higher the individual's participation in the insurance market. Given the lower level of insurance literacy compared to financial literacy, policymakers and institutions must provide more insurance education.

To insure or not to insure? Promoting trust and cooperation with insurance advice in markets

We design and test a novel insurance advice mechanism aimed at promoting trust and cooperation in markets with asymmetric information. In a buyer-seller game with third-party insurance, sellers have the option to advise buyers on whether to purchase insurance against the potential losses from the opportunistic behavior of strategic sellers. We hypothesize that advising not to purchase insurance introduces a psychological cost for defection. We develop a theoretical model that selects a pooling equilibrium where both cooperative and strategic sellers advise buyers not to purchase insurance. Once this advice has been given, strategic sellers choose not to defect if the associated psychological costs are sufficiently large. Data from a controlled laboratory experiment shows that the insurance advice mechanism significantly increases market efficiency, with buyers being more likely to purchase from sellers and sellers being more likely to cooperate. Furthermore, we find that the insurance advice mechanism is more effective when sellers can observe buyers’ insurance purchase decisions.

Income elasticity of demand for agricultural insurance in Poland in 2006–2020

Knowledge of income elasticity of demand for individual products is necessary to forecast the volume and structure of demand. The purpose ofthis article is to estimate the income elasticity of different types of agricultural insurance in Poland and to indicate the consequences for future demand for this insurance. According to the results ofthe analysis carried out for the years 2000–2020, premium from crop insurance to the greatest extent – compared to other types of agricultural insurance – depends on both GDP and disposable income (per farmer’s household or per person in the household). Income elasticity – respectively 3.05 in relation to GDP for compulsory crop insurance and 2.07 for voluntary crop insurance – indicates that these kinds of insurance should be classified as superior goods. Other types of agricultural insurance – farmer’s liability insurance (income elasticity 0.78) and insurance of agricultural buildings (0.65) are normal goods. This means that with an increase in income, ceteris paribus, the share of farmers’ expenditure on crop insurance in the budget allocated by them for the purchase of agricultural insurance will increase.

Predicting Travel Insurance Purchases in an Insurance Firm through Machine Learning Methods after COVID-19

Travel insurance serves as a crucial financial safeguard, offering coverage against unforeseen expenses and losses incurred during travel. With the advent of the proliferation of insurance types and the amplified demand for Covid-related coverage, insurance companies face the imperative task of accurately predicting customers’ likelihood to purchase insurance. This can assist the insurance providers in focusing on the most lucrative clients and boosting sales. By employing advanced machine learning techniques, this study aims to forecast the consumer segments most inclined to acquire travel insurance, allowing targeted strategies to be developed. A comprehensive analysis was carried out on a Kaggle dataset comprising prior clients of a travel insurance firm utilizing the K-Nearest Neighbors (KNN), Decision Tree Classifier (DT), Support Vector Machines (SVM), Naïve Bayes (NB), Logistic Regression (LR), and Random Forest (RF) models. Extensive data cleaning was done before model building. Performance evaluation was then based on accuracy, F1 score, and the Area Under Curve (AUC) with Receiver Operating Characteristics (ROC) curve. Inexplicably, KNN outperformed other models, achieving an accuracy of 0.81, precision of 0.82, recall of 0.82, F1 score of 0.80, and an AUC of 0.78. The findings of this study are a valuable guide for deploying machine learning algorithms in predicting travel insurance purchases, thus empowering insurance companies to target the most lucrative clientele and bolster revenue generation.

A Survey of Availability Heuristics in Behavioral Economics and Its Application Analysis

Early in the 1990s, significant advancements were made in our understanding of the availability heuristic. Following that, economist Howard Kunreuther discovered that availability effects contribute to the explanation of the trend of insurance purchasing and sparing actionafter disaster during the initial phaseof his profession investigating risk and insurance. The most significant research on availability biases was done in Eugene. They conducted ground-breaking research on how people perceive risks, including a study that has come to serve as the paradigmatic illustration of an availability heuristic [1]. This paper introduces the concept of the availability heuristic in behavioral economics, outlining the development of the theory and its importance. At the same time, this study demonstrates through three applications (investment decision, advertising, moral strength, and ethical decision-making). These three applications prove that if the availability heuristic is triggered, people will focus on facts that is current or readily recalled rather than analyzing every relevant details. As a result, this will increase the likelihood of an incident or the occurrence of a group they assess.

Feeder and fed cattle purchases of livestock risk protection

PurposePremium subsidy rates were increased in 2019 and 2020 for livestock risk protection (LRP) insurance, which is price insurance for cattle producers. The authors examined if the LRP subsidy rate changes affected the LRP coverage levels purchased by feeder and fed cattle producers.Design/methodology/approachThe authors collected the United States Department of Agriculture Risk Management Agency summary of business sales data for daily LRP purchases from 2015 to 2023. The authors estimated a multinomial logit model to determine if subsidy rate changes were associated with the likelihood of LRP policies being purchased at different coverage levels.FindingsAfter the 2019 and 2020 subsidy rate changes, the likelihood of producers buying LRP-feeder cattle policies with coverage over 95% increased relative to the policies with coverage less than 89.99% but did not influence the likelihood of producers buying LRP-feeder cattle policies with coverage between 90 and 94.99% relative to policies with coverage less than 89.99%. Marginal effects show these subsidy rate changes increased the likelihood of buyers purchasing LRP-feeder cattle policies with greater than 95% coverage. The subsidy change did not affect the purchase of LRP-fed cattle policies.Originality/valueThe results demonstrate the influence of the recent LRP policy adjustments on insurance purchases, which could be important for agency officials and policy makers. This is the first study to explore the LRP policy purchases which provides the United States cattle industry insight into the LRP price insurance take-up, which can guide producer extension education on managing price risk.

Interpretable Machine Learning Reveals Potential to Overcome Reactive Flood Adaptation in the Continental US

AbstractFloods cause average annual losses of more than US$30 billion in the US and are estimated to significantly increase due to global change. Flood resilience, which currently differs strongly between socio‐economic groups, needs to be substantially improved by proactive adaptive measures, such as timely purchase of flood insurance. Yet, knowledge about the state and uptake of private adaptation and its drivers is so far scarce and fragmented. Based on interpretable machine learning and large insurance and socio‐economic open data sets covering the whole continental US we reveal that flood insurance purchase is characterized by reactive behavior after severe flood events. However, we observe that the Community Rating System helps overcome this behavior by effectively fostering proactive insurance purchase, irrespective of socio‐economic backgrounds in the communities. Thus, we recommend developing additional targeted measures to help overcome existing inequalities, for example, by providing special incentives to the most vulnerable and exposed communities.

Aspects Influencing Personal Life and Health Insurance Purchase

The study aims to identify the factors that influence the purchase decision of life & health insurance in Indonesia and determine how those factors influence. The method used in this study is qualitative method with semi-structured interviews. A total of 17 respondents were interviewed from insurance customers, non-insurance customers, and insurance agents in Bandung City. The result of this study indicates that demographic factors such as income level, assets, educational background, financial dependency, and health status directly influence life & health insurance purchase decisions. Insurance product benefits, price, trust in insurance companies, trust in insurance agents, and perceived value insurance were found to influence life & health purchase decisions too directly. Additionally, multiple factors were found to influence insurance trust. These factors include the insurance company brand, selling practices used by insurance agents, perceived service quality of insurance, and insurance literacy. Furthermore, insurance perceived value was also influenced by other factors such as insurance literacy, culture, and environment. Above all aspects, the insurance agents have direct control over the selling practices, service quality, and insurance literacy that someone experience. This study also proved that insurance agents were responsible for the insurance industry’s bad reputation in Indonesia. This result will equip insurance agents to know their customers better and adjust their selling practices to suit potential customers. Insurance agents are also strictly prohibited from mis-selling insurance products.

Optimal investment, consumption and life insurance purchase with learning about return predictability

This paper studies the optimal investment, consumption and life insurance purchase problem for a wage earner under the condition that the return on the risky asset is predictable. We assume that the market price of risk is an affine function consisting of an observable and an unobservable factor that follow the O-U processes, while the evolution of the interest rate is described by the Vasicek model. The optimal investment, consumption and life insurance strategies and the corresponding value function are derived by adopting the filtering technique and the dynamical programming principle approach. In addition, for comparative analysis, the suboptimal strategies and the utility losses are presented when the wage earner ignores learning or the randomness of the interest rate. Finally, some numerical examples are presented to illustrate the results.

The Optimal Consumption, Investment and Life Insurance for Wage Earners under Inside Information and Inflation

This paper studies the dynamically optimal consumption, investment and life-insurance strategies for a wage earners under inside information and inflation. Assume that the wage earner can invest in a risk-free asset, a risky asset and an inflation-indexed bond and that the wage earner can obtain some additional information on the risky asset from the financial market. By maximizing the expected utility of the wage earner’s consumption, inheritance and terminal wealth, we obtain the dynamically optimal consumption, investment and life-insurance strategies for the wage earner. The method of this paper is mainly based on (dynamical) stochastic control theory and the technique of enlargement of filtrations. Moreover, sensitivity analysis is carried out, which reveals that a wage earner with inside information tends to increase his/her consumption and investment, while reducing his/her purchase of life insurance.

Unpriced and unseen: private information and taxi insurance purchases in Taiwan

Unpriced and unseen: private information and taxi insurance purchases in Taiwan

Optimal consumption, investment and life insurance selection under robust utilities

We study the problem faced by a wage earner with an uncertain lifetime who has access to a Black–Scholes-type financial market consisting of one risk-free security and one risky asset. His preferences relative to consumption, investment and life insurance purchase are described by a robust expected utility. We rewrite this problem in terms of a two-player zero-sum stochastic differential game and we derive the wage earner optimal strategies for a general class of utility functions, studying the case of discounted constant relative risk aversion utility functions with more detail.

Does Music Encourage Residents to Purchase Commercial Insurance? Evidence From China

Commercial insurance is an important risk management tool whose demand is affected by psychological factors. Music can promote consumption by evoking non-random emotional and behavioral responses in consumers . Using data from the China Comprehensive Social Survey, we examined the impact of music on commercial insurance purchase behavior using a probit model, an instrumental variable, propensity score matching, and other methods. The results indicate that music can significantly increase the probability of residents purchasing commercial medical insurance and endowment insurance by 2.569% and 1.869%, respectively. Regarding the mechanism, music encourages residents to purchase insurance by increasing their general cognition, risk cognition, insurance cognition, and ability to manage risk. Furthermore, an analysis of heterogeneity shows that music plays a greater role in promoting the aforementioned behavior of residents with lower levels of education, lower frequencies of social interaction, internet usage, an agricultural household registration, and of residents with jobs.

전세사기 발생원인 및 법적 방지방안에 관한 연구

In the last 2~3 years, the sale price of real estate has plummeted, and the news about the crime of rental fraud continues day after day. In this situation, the contents of the government’s recent measures about rental scam can be broadly summarized as prevention, support, crackdown, and strengthening of punishment. Among them, preventive measures include reducing the pre-tax rate subject to tax return guarantee from 100% to 90%, and preventing senior mortgage loans after the contract by providing information on each stage of the contract. If the landlord enters into a contract for the sale of the leased object with a third party during the rental(or lease) period, preventive measures such as requiring the tenant to notify the tenant in advance must be written in the standard contract and provided by the Association of Certified Realtors. On the other hand, it seems necessary to reconsider measures such as providing the credit information of the landlord to individuals such as authorized brokers or lowering the rental price rate in connection with the purchase of rental guarantee insurance. In addition, it is necessary to regulate certified brokers and real estate consulting firms that lead real estate transactions in close contact with the general public, and it is necessary to create institutional conditions for the general public to conduct real estate transactions transparently.