Effect Of Insurance Research Articles

Does crop insurance attenuate farm financial risk?

PurposeFederally subsidized crop insurance aims to mitigate farm risks of crop producers. A body of literature has examined informational problems under this program. However, few studies empirically link crop insurance participation with farm financial performance. Most use county-level aggregates to argue that crop insurance participation is associated with increased farm financial debt. Using farm-level data, this study provides empirical evidence of crop insurance's effects on farm financial risk.Design/methodology/approachThe impact of crop insurance on farm financial risks is assessed using farm-level data from Kansas. The sample consists of at least 1,600 farms each year from 2002 to 2015. Financial risks are measured using the probability of falling into the critical zone of five different financial ratios. The study uses two matching estimators to estimate the causal effects of crop insurance participation on farm financial risks. Several alternative empirical approaches account for unobserved heterogeneity and potential endogeneity.FindingsCrop insurance participation has reduced the farm's likelihood of being in the critical liquidity risk by 8%. This result is robust across matching estimators and alternative specifications to account for unobserved heterogeneity and potential endogeneity.Originality/valueThis is one of the few studies to examine whether crop insurance reduces farm financial risks. This study provides empirical evidence of the extent to which crop insurance enrollment impacts farm financial risks. Findings suggest that crop insurance is critical to maintaining the financial well-being of crop producers, and significantly reduces the likelihood of producers being in a critical liquidity risk.

Toward Greater Accountability in Mental Health Care.

Lack of accountability contributes to the gap between best practices and potential outcomes. Few mental health providers routinely practice evidence-based care. In fact, within the mental health field, there is significant controversy over the use of evidence-based practices. Lack of accountability affects individuals receiving care at the patient level, provider level, and systems level. The authors identify several impediments to accountability in behavioral health care. These include failure to develop a diverse, well-trained workforce; challenges in measurement; misalignment of payment incentives; and misguided regulations. Accountability arrangements typically consist of several elements: a clear articulation of goals, objectives, or standards; metrics so that progress toward achieving goals can be tracked; and consequences for insurers, providers, and professionals for achieving or failing to achieve objectives. To advance system goals, the full complement of accountability tools should be consistently applied to all sources of behavioral health care and supports. The authors focus on three sets of accountability tools-performance metrics, payment incentives, and regulatory standards-that when implemented thoughtfully can help move the field toward more positive outcomes in behavioral health.

The Rise of the Big Data Doctor: Recent Advances and Warnings in Digital Public Health Technology

The continuing expansion of social media and big data presents positive opportunities for healthcare research, public health surveillance, and dissemination of health information. However, caution must be used as online data can be harvested and sold without permission from the public. This includes social manipulation, such as the targeting of voters during elections, or pre-determining the likelihood of an individual engaging in high-risk behaviours with associated social, employment, or insurance consequences. The first independent COVID-19 contact tracing application (app) in the UK was unsuccessful. Subsequently, the UK Government has sought to develop apps with the help of large technology firms. These companies generate profit through surveillance capitalism - the mining of human digital activity for profit. Although large technology companies may have the resources available to assist with public health endeavours, their primary obligation to the shareholder should not be overlooked. This narrative review explores recent positive advances in the use of data derived from social media. It also highlights concerns about the potential to abuse this technology for outcomes that are not in the best interests of our patients or general population.

Observable Cyber Risk on Cournot Oligopoly Data Storage Markets

With the emergence of global digital service providers, concerns about digital oligopolies have increased, with a wide range of potentially harmful effects being discussed. One of these relates to cyber security, where it has been argued that market concentration can increase cyber risk. Such a state of affairs could have dire consequences for insurers and reinsurers, who underwrite cyber risk and are already very concerned about accumulation risk. Against this background, the paper develops some theory about how convex cyber risk affects Cournot oligopoly markets of data storage. It is demonstrated that with constant or increasing marginal production cost, the addition of increasing marginal cyber risk cost decreases the differences between the optimal numbers of records stored by the oligopolists, in effect offsetting the advantage of lower marginal production cost. Furthermore, based on the empirical literature on data breach cost, two possibilities are found: (i) that such cyber risk exhibits decreasing marginal cost in the number of records stored and (ii) the opposite possibility that such cyber risk instead exhibits increasing marginal cost in the number of records stored. The article is concluded with a discussion of the findings and some directions for future research.

Trends in weather related disasters – Consequences for insurers and society

Abstract As extreme weather events affect the core business of insurance this industry has quite early addressed potential effects of natural climate cycles and global warming on natural catastrophe hazards. Munich Re’s experts have been researching loss events caused by natural hazards around the globe for 40 years. These losses are documented in the NatCatSERVICE database currently documenting more than 36,000 single events. The analyses of the NatCatSERVICE data clearly show a high interannual variability, in some regions decadal oscillations, and a long term trend to an increase in the number of natural catastrophes around the globe, with ever growing losses. The trend curve indicating the number of loss relevant natural catastrophes worldwide reveals an increase by a factor of about three within the last 35 years. As the rise in the number of natural catastrophes is predominantly attributable to weather-related events like storms and floods, with no relevant increase in geophysical events such as earthquakes, tsunamis, and volcanic eruptions, there is some justification in assuming that changes in the atmosphere, and global warming in particular, play a relevant role. However, the main contribution to the upward trend of the losses caused by natural catastrophes comes from socio-economic/demographic factors such as population growth, ongoing urbanization and increasing values being exposed. Prevention measures, especially flood protection programs, on the other hand have a high potential to even reduce losses while the hazard has increased. Because of such factors influencing the loss trends a clear attribution of at least part of the effects to global warming is very difficult. There is, however, an increasing number of studies, which show significant increases in losses in some regions and for some perils even after they have been normalized to the exposed values today. Looking at trends of extreme weather events and their effects, natural climate variability has to be considered. Short term oscillations such as ENSO as well as decadal oscillations in hurricane (Atlantic Multidecadal Oscillation) or typhoon activity (Pacific Decadal Oscillation) still play a dominant role on the variability of losses caused by weather extremes. As global warming will continue in the coming decades, its contribution to increasing natural catastrophe losses will become more prominent, a projection also given by the 5th assessment report of the Intergovernmental Panel on Climate Change (IPCC 2014). As long as the risks from weather related disasters stay calculable and the insureds can afford a risk adequate premium there is no danger that such risks become uninsurable. Insurers, however, have to invest more resources into analyses of trends and have to assure that premiums for the risks they cover always reflect a dynamic hazard pattern. There is no sensible way to interfere with natural climate oscillations influencing natural catastrophe losses. Humankind, however, still has the chance to avoid catastrophic increases of losses caused by global warming driven weather extremes by ambitious climate protection and adaptation measures.

Diagnosis and treatment of gastroesophageal reflux at ear-nose-throat outpatient care unit and its insurance consequences

Gastroesophageal reflux is a frequent, varied disease, which spoils the quality of life. It may be present in extraesophageal form, affecting larynx, pharynx, upper respiratory tracts, accessory cavities and middle ear. The mass of outpatients and the shortage of diagnostic capacities are justifying to make diagnosis based on symptoms, and to apply therapy introduced via medical tests. Author reports the experiences of 1000 processed cases, and insurance consequences are discussed, as well.

Life insurance and genetic tests: Risks for insurers and society

The uncertainties surrounding the rapid advances being made in genetic testing and its subsequent use in the life insurance underwriting process has caused much consternation and apprehension throughout society and the insurance industry in recent years. The diagnostic and predictive power of genetic testing has introduced a new variable for insurers to select and classify applicants for life insurance. However, such use by insurers present many complex social, ethical and regulatory questions. This paper explores life insurers' use of genetic test results and the consequences for insurers should they be denied access to this actuarially relevant material. In addition, the risks posed for society from insurers' use of this information is analysed from the results of a survey and case study conducted in the Republic of Ireland in 2007. Given that the future use of genetic test results by life insurance companies depends heavily on public acceptance, it is important to understand reactions of the public, in relation to their risk perception and acceptance of this particular commercial use of genetic testing. To conclude, the paper briefly explores general international reaction to the risks posed by the use of genetic test results in underwriting life insurance applicants.

Tax Reform's Impact on Insurance Industry Stock Returns

This article analyzes the market response of insurers' stock returns to the formulation debate, and enactment of the Tax Reform Act of 1986. Provisions of the Tax Reform Act portended increases in the effective tax rates of insurers despite the proposed lowering of marginal rates. The stock prices of insurers reacted negatively in the formulation, debate, and Committee mark-up phases of the legislative process. Significant abnormal returns were not evidenced in the enactment phase. Several provisions of the Tax Reform Act of 1986 (hereafter referred to as TRA '86) boded unfavorable consequences for insurers. The repeal of the 20 percent special life insurers' deduction, limitations of loss reserves to the present value of unpaid losses, reduction n the deductibility of unearned premiums, taxation of a portion of certain dividends (those subject to the intercorporate exclusion) and previously tax-exempt securities, and the potential tax on inside buildup, were aimed directly at the operations of insurers.(1) Stockholders' expectations could have been adversely impacted by the announcement of any one or combination of these provisions as they progressed through the legislative process. The purpose of this article is to analyze the market response of insurers' stock returns to the formulation, debate, and enactment of TRA '86. Data and Methodology The sample analyzed in this study consists of 19 large, publicly-traded insurers.(2) Each company in the final sample successfully completed the following screening process. First, a sample participant had to have an uninterrupted return series for the entire analysis period. Second, the shares of a sample company had to be actively traded so that non-synchronous price data were not an important problem. Third, a sample participant could have no major firm-specific announcements during the estimation and event intervals. The screening for firm-specific announcements entailed a search of the Wall Street Journal Index beginning six months prior to an event date and extending through the analysis period. When a relevant firm-specific event occurred, the company was eliminated as a sample observation. The well-known Fama, Fisher, Jensen, and Roll methodology is used to estimate the market's reaction to new information about TRA '86.(3) The Fama, et.al. approach facilitates the construction of statistical tests that can reveal significant departures of actual returns from those predicted by the single-index return generating model. Once a sample has been screened for return variations due to specific firm effects, the remaining residual (abnormal) returns are attributable to the event being studied. The event interval analyzed in this article extends from 60 days prior to a particular event date (ED-60) to 60 days after the event date (ED+60). Furthermore, each of the four event windows (EWs) was separated into several sub-phases around its specific event date. The reasoning behind this approach is as follows. The content of pending tax legislation begins to leak to the public prior to the scheduling of hearings and other official proclamations. Hence, adjustments of returns may begin to occur in the pre-announcement and pre-enactment phases of the event period. As investors come to anticipate specific changes in the tax code, they act on their expectations and returns begin to adjust before the event's official announcement. Return adjustments following the announcement and passage of TRA '86 were evaluated in terms of the significance of cumulative residuals over the period ED+1 to ED+60. The event windows considered in this article are listed in Table 1. The announcement of President Reagan's tax reform proposal and Chairman Rostenkowski's agreement to work with the Administration to draft a tax package are the main focuses of EW-1. Both Treasury I and II included modifications to the tax code that had important implications for insurers. …