Insurance Value Research Articles

Insurance Literacy in Australia: Not Knowing the Value of Personal Insurance

ABSTRACT Underinsurance and low financial literacy have been shown to be key issues impacting the effectiveness of personal financial management. Both issues are made more important by the complex financial system, an ever moving array of financial products and services, and the progressive move towards self-reliance in retirement. These factors suggest a greater degree of financial independence and more effective financial decision-making is required over the long-term, both of which may be undermined by low financial literacy and underinsurance. Little is known, however, about the impact of financial illiteracy on the propensity to seek and retain insurance. Using an interview methodology, we obtained the views of informed and non-informed participants to examine insurance literacy in Australia. We find evidence that insurance literacy of consumers is generally low and exacerbated by factors such as low product knowledge, low trust of providers, low awareness of risk mitigation strategies, and behavioural decision-making biases. These factors can culminate in a perception of low value and subsequent underinsurance. Furthermore, this appears to be more acute for personal insurances as opposed to general insurances.

Measuring the Value of the Assets of the Monument Building When Assessing the Insured Value of an Object

Abstract The forthcoming transfer of St. Isaac’s Cathedral in St. Petersburg being a UNESCO World Heritage Site to the Russian Orthodox Church ignites a heated debate within the Russian society. The cathedral being part of the State Museum Complex stands out as a pearl of the world’s iconic architecture. Furthermore, it is the second most visited museum after the Hermitage, boasts an outstanding exhibition potential, and it regularly hosts church services and ritual events. Museum collections exceed twenty-four thousand items of storage, and they continue to be replenished with found rarities and newly restored objects with the status of a relic to be protected. The aim of the article is to measure the value of the assets of the monument building, assessing the insured value of the object. Uncertainty of the future use of the disputed object, however, allows us to consider the calculation capabilities and methodical tools of valuation activities to measure the market and insurance value of such a real estate object and land plot, for example, in order to practice damage compensation and transfer the object from the balance sheet of one owner to balance of another owner. The latter circumstance determines the main discourse of this study. The present article is devoted to questions of an expert estimation of the insured value of the object of research in the form of St. Isaac’s Cathedral. The article is a continuation of a series of previously published works by the author.

More on the Value of Health Insurance: The Appropriateness Approach

This paper examines the three major theories that have influenced the perception of the value of health insurance: (1) risk protection (Arrow, 1963), (2) moral hazard (Pauly, 1968; de Meza, 1983; Pauly, 1983) and (3) the access motive (Nyman, 1999; Nyman, 2006). To overcome the separating aspects of these theories and to include empiric results about the appropriateness of health care (Lohr, et al., 1986; Siu, et al., 1986; Brook, et al., 1986), an all-embracing theoretic approach is developed. The new model merges the above mentioned theories and includes empiric findings about appropriateness of care. It furthermore publicizes the existence of “moral hazard welfare gain” and “access motive welfare loss” as new categories. Preventive care is integrated into this new approach to health insurance theory.

Valuation of Survivorship Life Insurance with Stochastic Rates of Return and Dependent Mortality

Life insurance has been one of the many options for people with concerns about the uncertainty of their future, because it is designed to protect against the serious financial impact that results from an individual′s death. An important variation of the single life insurance is the survivorship life insurance which covers two or more lives. Under such contract, a death benefit is paid out only on the last death. Insurance valuation is a very important tool for many insurance companies to be able to know its financial status in order to meet its future obligations. The valuation of an insurance policy comprises of 2 main components, they are: rates of return and mortality assumption. Traditionally, actuaries assume a constant interest rates and an independent mortality assumption in valuing joint-life insurance for the sake of simplicity. However, there has been considerable interest in the actuarial literature in studying the use of stochastic interest rate models and dependent mortality assumptions for insurance valuations. In this study, the mathematical expressions to value survivorship life insurance with stochastic rates of return and dependent mortality are presented. The valuation is conducted by the means of calculation of the expected value of the prospective loss random variable, by assuming an AR(1) process and Frank’s Copula to model the rates of return and the dependent mortality of the lifetimes of the policy holders, respectively.

The Price of Safety: The Evolution of Insurance Value in Municipal Markets

Economic theory predicts that bond insurance lowers issuers’ financing costs by resolving asymmetric information and mitigating credit risk. With comprehensive data over the last 36 years, we find increasingly diminished empirical support for these models. The value of insurance in resolving asymmetric information beyond that resolved by credit ratings and other observable characteristics is economically minimal. The average gross value of insurance ranges 4 to 14 bps when bond insurers offer Aaa-rated coverage, with the value of insurance increasing in market competition. However, this gross value becomes insignificant after 2008 when Aaa-rated insurance no longer exists due to widespread downgrades and bankruptcies of bond insurers. Evidence suggests that the lack of insurance benefit in the post-crisis period is likely attributable to the deteriorated creditworthiness of insurance companies. Examining non-interest saving explanations for the continued use of insurance in the post-Aaa insurance market, we find evidence that issuers purchase insurance out of habit (especially those with low governance quality) and for the convenience it affords in a default event, but no evidence that insurance improves secondary market liquidity.

Metodické postupy vedoucí ke stanovení pojistné hodnoty rodinného domu na českém pojistném trhu

Metodické postupy vedoucí ke stanovení pojistné hodnoty rodinného domu na českém pojistném trhu

PHP317 - IDENTIFYING THE CHANGES REQUIRED IN HEALTH TECHNOLOGY ASSESSMENT SYSTEMS IF OUTCOMES ARE TO BE OPTIMIZED IN A DIGITAL WORLD WHERE PERSONALIZED DATA AND PRECISION MEDICINE COLLIDE

To identify the changes required in Health Technology Assessment (HTA) systems in order for digital health and precision medicine to deliver on the promise of significantly improving economic, clinical and humanistic outcomes (ECHO). Digital health is the convergence of digital and genomic technologies to enhance the efficiency of healthcare delivery and make medicines more personalized and precise. A targeted literature review and a series of payer thought leader interviews (n=12, US, EU5) were undertaken to identify barriers to digital health with particular focus on patient-level real-world / real-time data sourced through digital monitoring, interventional disease management, predictive analytics and precision medicine. The analysis identified significant areas of commonality and differences between countries. Barriers identified included: The need for change in the roles of the physician and data in disease management; the episodic nature of payment systems and the funding of healthcare; and Payer and Patient willingness or reluctance to pay. Areas of value not currently incorporated in HTA assessment were identified. These included: cost savings outside the health system, reduction in uncertainty, insurance value, real option value, and the value of hope. Evidence sources are developing rapidly on the back of digital technologies, with the potential to offer deeper insight into the efficiency and effectiveness of disease management options. However evidence requirements of HTA are evolving at a much slower pace. Significant changes are required in Health Technology Assessment in order for the benefits of digital health and precision medicine to be incorporated and leveraged in decision making.

Strategic bank closure and deposit insurance valuation

This study formulates the deposit insurance valuation problem as a zero-sum optimal stopping game using Israeli option with bankruptcy cost. Specifically, closure of a bank is framed as a game between the insured bank and the deposit insurer, in which a bank with financial difficulties is choosing an optimal self-closure point to maximize its benefits from the deposit insurance scheme; and the deposit insurer is choosing an optimal regulatory closure point to minimize their cost of offering the insurance. In such setting, the deposit insurance itself could be regarded as an Israeli put option. With bankruptcy costs taken into consideration, we managed to derive the closed-form solutions to the deposit insurance premium together with the endogenous closure points. Our model could also be used to justify the scenarios of too big to fail, reorganization of problematic bank, and regulator’s forbearance.

PENENTUAN CADANGAN PREMI DENGAN METODE NEW JERSEY PADA ASURANSI JOINT LIFE

Joint Life insurance is an insurance that covered two individuals in one policy. The purpose of this research is to determine and to compare the reserve value of Joint Life insurance using New Jersey method and Prospective method with and without New Jersey method. The method that used in this research are New Jersey method, the participants of this assurance is a couple of husband and wife between 45 and 40 years old with 30 years period, interest levels at 6,5%. The results of this represent reserve value with New Jersey method always smaller, and the reserve value in the 30 years period have the same result using New Jersey method and Prospective method.

Influence of a Board-Level Risk Committee on Value

This study finds a negative relation between the use of a board-level risk committee and insurer value. The data are annual observations from 68 publicly traded insurers over years 2016 to 2003. The study examines the impact on value because the arguments favoring the use of a board-level risk committee mostly frame its use in terms of the strategic benefits it confers to the firm. The finding of this study holds under different estimation models, across different sub-periods and with alternative variables. The finding of the study is consistent with available literature on firm risk governance and corporate risk management in well-functioning markets.

Early Identification of Potential SSDI Entrants in California: The Predictive Value of State Disability Insurance and Workers' Compensation Claims.

Purpose Examine the potential for using information in short-term disability claims to identify workers at high risk of leaving the workforce and entering Social Security Disability Insurance (SSDI). Methods We analyze state-wide California data on claimants of State Disability Insurance (SDI) and Workers' Compensation (WC) and present statistics on: (1) characteristics (primary diagnosis, sex, age, geography, wage level) by claim duration (0-3, 4-6, 7-12, 12 +months); and (2) the ability of initial claim characteristics to predict duration of at least 12months. All data are for claims with disability lasting more than 1week. Results 22.2% of SDI claims last longer than 6months and 12.5% last 12months. More WC claims reach these durations: 33.7 and 18.6%, respectively. Long-term SDI and WC claimants are similar to SSDI awardees, nationwide, but differ in age distribution; they are typically younger. Conclusions Characteristics of SDI and WC claims can help predict claims likely to last 12months, but more information is needed to effectively target early intervention services. Waiting longer to intervene improves targeting but risks missing opportunities where early intervention could be more effective. Collecting additional information at SDI or WC entry or soon thereafter could improve both the efficiency and timing of interventions.

Exploring characteristics and transformational capabilities of InsurTech innovations to understand insurance value creation in a digital world

Recent developments in the insurance industry embrace various “Insurance Technology” (InsurTech) innovations. To date, there is a lack of structured assessments of InsurTech. Prior research on FinTech fails (1) to clarify how InsurTech can be characterized and what capabilities are employed, and hence, (2) to reveal implications for value creation on firm and industry level. We address this by inductively building a model of InsurTech innovation adopting the grounded theory method. Our empirical data includes 208 InsurTech innovations from a market analysis based on Twitter data and a multiple-case study. The resulting model comprises 52 characteristics and 14 transformational capabilities and is integrated with extant value networks and intermediation literature. The former explains how InsurTech affects firm-level value creation and suggests that disruptive potentials emerge from aligning the transformational capabilities along three interdependent activities. The latter explains the entrance of digital intermediaries and their roles in the personal insurance market.

Implementing IDD across the EU—first findings and the way forward

The Insurance Distribution Directive might be dysfunctional in substantial areas of the insurance value chain, ranging from product development to after-sale services. Practical examples are fundamental conflicts with Solvency II, confusion of distribution and claims management, disproportionate complexity for B2B, one-size-fits-all for insurance and investment products, barriers to existing customers, disruption of the digital customer journey, and a monoculture of group insurance contracts. This article provides for a preliminary analysis and identifies potential issues for review at a later stage.

PHP3 - Perceived Value of Health Insurance and Enrollment Decision Among Low-Income Population

Individual mandate is one of the key features of the Affordable Care Act. This study assesses the uninsured rate in various subgroups and describes the differences between the uninsured and the insured focusing on individuals’ attitudes toward risk. The 2014 Medical Expenditure Panel Survey-Household Component (MEPS-HC) full year consolidated data file were analyzed. The study included people in poverty who were eligible neither for public coverage nor for employer-sponsored insurance. Factors predicting likelihood of being uninsured were examined using a logit model. The study included 2,258 individuals. Thirty four percent of the sample remained uninsured. The uninsured were likely to have lower demand for insurance and perceived value of insurance. Zero doctor visit was the strongest predictor of likelihood of being uninsured. It appears that adverse selection exists in individual insurance market. The outreach efforts should focus on increasing perceived value of health insurance.

An exploratory case study of the impact of expanding cost-effectiveness analysis for second-line nivolumab for patients with squamous non-small cell lung cancer in Canada: Does it make a difference?

IntroductionHealth technology appraisal agencies often rely on cost-effectiveness analyses to inform coverage decisions for new treatments. These assessments, however, frequently measure a treatment’s value from the payer’s perspective, and may not capture value generated from reduced caregiving costs, increased productivity, value based on patient risk preferences, option value or the insurance value to non-patients. MethodsTo examine how using a broader societal perspective of treatment value affects cost-effectiveness estimates, this case study analyzed the net monetary benefit (NMB) of second-line nivolumab treatment of patients with squamous non-small cell lung cancer (NSCLC) in Canada. The comparator was treatment with docetaxel. NMB was measured from three perspectives: (i) traditional payer, (ii) traditional societal and (iii) broad societal. ResultsNivolumab was more effective (increased quality-adjusted life years by 0.66 versus docetaxel), but also increased costs by $100,168 CAD. When valuing a quality-adjusted life year at $150,000, the net monetary benefit from the payer perspective suggested that costs modestly exceed benefits (NMB: −$1031). Adopting a societal perspective, however, nivolumab’s benefits outweighed its costs (NMB: +$6752 and +$91,084 from the traditional and broad societal perspectives, respectively). ConclusionBroadening cost-effectiveness analysis beyond the traditional payer perspective had a significant impact on the result and should be considered in order to capture all treatment benefits and costs of societal relevance.

Perceived Value of Health Insurance and Enrollment Decision among Low-Income Population

The individual mandate is one of the key features of the Affordable Care Act (ACA) and has contributed to a substantial decrease in the overall uninsured rate. We examined the relationship between the individual's insurance status and his/her attitude towards risk and uncertainty among the nonelderly adults, without employer-sponsored insurance (ESI) sources and who are most likely to benefit from the ACA. A descriptive, cross-sectional study was conducted using the 2014 full-year consolidated data file from the Household Component of the Medical Expenditure Panel Survey-Household Component (MEPS-HC). This study included 4,848 individuals, aged 18-64 years, with incomes between 138-400 % of the Federal Poverty Level (FPL), and without access to public coverage or ESI. We examined the factors associated with the likelihood of being uninsured using a logit model. We found that the proportion of the uninsured among the low-income nonelderly adults without ESI (31.1%) was much higher than the one among the nonelderly adults (14.3%). The uninsured adults were likely to have lower demand for insurance and perceived value of insurance and were less likely to visit a doctor or to fill prescription drugs. More rigorous outreach efforts focusing on increasing perceived value of health insurance could contribute to an increased insurance coverage among low-income populations.

THE AGRICULTURAL INSURANCE MARKET IN POLAND

The paper presents issues related to the agricultural insurance market in Poland. The research period concerned the years 2006-2015. The market on the supply side was quite stable, there were no sudden changes in the number of companies and its structure. The paper analyzes changes in the number, value of agricultural insurance, as well as their share in insurance from the second section. A very strong positive correlation between the insurance and the value of GDP as well as a smaller one in relation to the value of global agricultural production was found. In turn, the strength of the relationship between economic and agricultural parameters with compensation from agricultural insurance was lower. For compensation from insurance of buildings in farms, the dependencies were even more insignificant. This was a result of the unpredictable actions of natural forces and other extraordinary events.

Estimated value of insurance premium due to Citarum River flood by using Bayesian method

Citarum river flood in South Bandung, West Java Indonesia, often happens every year. It causes property damage, producing economic loss. The risk of loss can be mitigated by following the flood insurance program. In this paper, we discussed about the estimated value of insurance premiums due to Citarum river flood by Bayesian method. It is assumed that the risk data for flood losses follows the Pareto distribution with the right fat-tail. The estimation of distribution model parameters is done by using Bayesian method. First, parameter estimation is done with assumption that prior comes from Gamma distribution family, while observation data follow Pareto distribution. Second, flood loss data is simulated based on the probability of damage in each flood affected area. The result of the analysis shows that the estimated premium value of insurance based on pure premium principle is as follows: for the loss value of IDR 629.65 million of premium IDR 338.63 million; for a loss of IDR 584.30 million of its premium IDR 314.24 million; and the loss value of IDR 574.53 million of its premium IDR 308.95 million. The premium value estimator can be used as neither a reference in the decision of reasonable premium determination, so as not to incriminate the insured, nor it result in loss of the insurer.

How Drought Affects Agricultural Insurance Policies: The Case of Italy

Despite their growing intensity and the enormous costs, adverse meteorological events are still perceived as “exceptional”. Among the adverse weather events, the management of drought risk plays a key role due to the more pressing problem of the scarcity of water resources. In this context, agricultural insurance can represent a financial and risk mitigation tool for farmers. In this perspective, the aims of this study are: (1) to analyze, through a systematic review, the main findings of the scientific literature focused on the empirical and theoretical approach to the relation between adverse weather events in agriculture, risk and insurance; (2) to collect agroclimatic and insurance data for each Italian province for the period 2004-2011, (3) to measure the influence of climatic agroclimatic variables on insurance variables, i.e. Total Premiums, Insured Value and Certificates.The results of the analysis show the significance of the precipitation variable and its negative effect with each insurance dependent variable. The same result can be observed focusing on the effect of minimum temperature on two insurance variables, i.e. Total Premiums and Certificates. Models tested explain a range between 44% and 51% of the variation in our insurance dependent variables.

Defining Elements of Value in Health Care—A Health Economics Approach: An ISPOR Special Task Force Report [3

The third section of our Special Task Force report identifies and defines a series of elements that warrant consideration in value assessments of medical technologies. We aim to broaden the view of what constitutes value in health care and to spur new research on incorporating additional elements of value into cost-effectiveness analysis (CEA). Twelve potential elements of value are considered. Four of them—quality-adjusted life-years, net costs, productivity, and adherence-improving factors—are conventionally included or considered in value assessments. Eight others, which would be more novel in economic assessments, are defined and discussed: reduction in uncertainty, fear of contagion, insurance value, severity of disease, value of hope, real option value, equity, and scientific spillovers. Most of these are theoretically well understood and available for inclusion in value assessments. The two exceptions are equity and scientific spillover effects, which require more theoretical development and consensus. A number of regulatory authorities around the globe have shown interest in some of these novel elements. Augmenting CEA to consider these additional elements would result in a more comprehensive CEA in line with the “impact inventory” of the Second Panel on Cost-Effectiveness in Health and Medicine. Possible approaches for valuation and inclusion of these elements include integrating them as part of a net monetary benefit calculation, including elements as attributes in health state descriptions, or using them as criteria in a multicriteria decision analysis. Further research is needed on how best to measure and include them in decision making.