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Life insurance as a tool to increase the welfare of the russian population

Life insurance has been the driving force behind the development of the Russian insurance market in recent years. The types of life insurance that are significant insurers in Russia include not only insurance protection for the population, but also compliance with the requirements for increasing financial resources, and thus high economic indicators of human welfare. The article provides a statistical analysis of the development of insurance in Russia on a special rise, which showed a progressive increase in insurance premiums and international agreements to identify risks. Also, it was found that the predominant types are accumulative and investment life insurance, which allow not only to provide insurance protection, but also implement accumulative and investment functions. At the same time, a significant territorial differentiation of insurance premiums for life insurance in Russia and a low level of its penetration were determined. The work systematized the studies of economists devoted to the indication of the determinants of the development of life insurance. An attempt was made to estimate the determinants according to Russian data. The authors built econometric models that allowed to determine the main factors influencing the development of life insurance as a way to strengthen the financial position of an individual in Russia. As a result of the study, it was revealed that at the level of the constituent entities of the Russian Federation, the determinants of demand are both social and economic factors. The stable regressors, significant in all constructed models, were the gross regional product per capita, the average monthly accrued wages, the female population and the number of unemployed. Also significant in some models were the population size and the level of education of the able-bodied population.

FINANCIAL ACCELERATOR AND BANK EXCESS LIQUIDITY IN CEMAC ZONE

In this paper, we broaden the debate on the determinants of bank excess liquidity by focusing on a new mechanism. Using time series data from six CEMAC countries and using shock simulation in a structural VAR as well as Cointegration analysis in an ARDL model, the empirical analysis shows that the financial rigidity caused by the increase in the information asymmetry premium leads to a fall in investment which weakens economic activity. The fall in economic activity amplifies the increase in information asymmetry premium resulting in an increase of free reserves. Finally when the effect of the financial accelerator is reduced by stretching the information asymmetry premium towards zero, then the refunding policy through calls to tender favors a decrease of interest rates, a profusion of credit and consequently the increase of investments and consumption. We suggest all measures aimed at reducing the asymmetry of information on the credit market, in particular, the creation of credit offices and / or public credit registers, the creation of rating agencies for companies and individuals, improvement of the quality of institutions whose poor quality leads to the camoufl age of information and moral hazards.

The Rise of the Machines: Automation, Horizontal Innovation, and Income Inequality

We build an endogenous growth model with automation (the replacement of low-skill workers with machines) and horizontal innovation (the creation of new products). Over time, the share of automation innovations endogenously increases through an increase in low-skill wages, leading to an increase in the skill premium and a decline in the labor share. We calibrate the model to the US economy and show that it quantitatively replicates the paths of the skill premium, the labor share, and labor productivity. Our model offers a new perspective on recent trends in the income distribution by showing that they can be explained endogenously. (JEL D31, E25, J24, J31, O33, O41)

Banks, Maturity Transformation, and Monetary Policy

Banks engage in maturity transformation and the term premium compensates them for bearing the associated duration risk. Consistent with this view, I show that banks’ net interest margins and term premia have comoved in the United States over the last decades. On monetary policy announcement days, banks’ stock prices fall in response to an increase in expected future short-term interest rates but rise if term premia increase. These effects are reflected in the response of banks’ net interest margins and amplified for institutions with a larger maturity mismatch. The results reveal that banks are not immune to interest rate risk.

Dissecting the yield curve: The international evidence

We develop a term structure model that decomposes nominal yields into the sum of an expectation, term premium, and convexity term and in turn of their real and inflation counterparts. The model explicitly captures the interrelation between yield-only and macroeconomic factors while allowing for aggregate stochastic volatility. We extract the components from the nominal and real yield curve of the United States, the Euro Area, the United Kingdom, and Japan. We find that short-rate expectations have steadily declined over the last two decades and account for the bulk of yield dynamics. Term premia increase with maturity but explain a smaller fraction of yield forecast error variance than previously documented. With regard to yield comovement, the United States generates the strongest spillovers at the long end of the yield curve, whereas the Japanese market is the top importer of shocks.

Financial performance of Nepalese insurance companies

This study examines the financial performance of Nepalese insurance companies. The dependent variables are return on assets and earnings per share while independent variables include insurance premium, firm size, current ratio and solvency ratio. Twenty-one insurance companies among them 8 are life insurance and 13 are non-life insurance companies with 105 observations for the period of 2070/71 to 2074/75, were selected for this study. The data were collected from insurance and financial statistics published by Beema Samiti and annual reports of the selected Nepalese insurance companies. The correlation coefficient and regression models were estimated to test the significance and importance of liquidity management on financial performance of Nepalese insurance companies.
 The results shows that insurance premium has positive impact on return on assets and earning per share. It means that increase in insurance premium leads to increase in return on assets and earnings per share. Likewise, firm size has positive impact on return on assets and earning per share. It indicates that increase in firm size leads to increase return on assets and earnings per share. Similarly, current ratio has negative impact on return on assets. It means that increase in current ratio leads to decrease in return on assets. Likewise, solvency ratio has negative impact on return on assets. It indicates that increase in solvency ratio leads to decrease in return on assets. Similarly, current ratio have positive impact on return on assets. It means that increase in current ratio leads to increase in earnings per share. Likewise, solvency ratio has positive impact on earnings per share. It indicates that higher solvency ratio, higher would be the earnings per share. The study also concludes that insurance premium followed by current ratio and firm size is the most influencing factor that explains liquidity management and financial performance of Nepalese insurance companies.

Adverse Selection in Medicaid

Recent expansions of Medicaid eligibility have come with increased experimentation with enrollee cost-sharing. In this paper, we exploit a discontinuous premium increase at the federal poverty level in Michigan’s Medicaid expansion program to test low-income individuals’ sensitivity to premiums using linked enrollment and claims data. At the cutoff, average premiums increase by $3.15 and the probability of disenrollment increases by 2.3 percentage points. Increased disenrollment occurs among those with fewer documented medical needs at baseline, but not among those with greater medical needs. These results suggest that healthier low-income individuals may be sensitive to even modest health insurance premiums, and that premiums may induce adverse selection in Medicaid plans.

To what extent do citizens support the disinvestment of healthcare interventions? An exploration of the support for four viewpoints on active disinvestment in the Netherlands

BackgroundActive disinvestment of healthcare interventions (i.e. discontinuing reimbursement by means of a policy decision) has received limited public support in the past. Previous research has identified four viewpoints on active disinvestment among citizens in the Netherlands. However, it remained unclear how strong these viewpoints are supported by society, and by whom. Therefore, the current study aimed to 1) measure the support for these four viewpoints and 2) assess whether support is associated with background characteristics of citizens. MethodIn an online survey, a representative sample of adult citizens in the Netherlands (n = 1794) was asked to rate their agreement with short narratives of the four viewpoints on a 7-point Likert scale. The survey also included questions on sociodemographic characteristics, health status, healthcare utilization, and opinions about responsibility and costs in the healthcare context. Logistic regression models were estimated for each viewpoint to assess the association between viewpoint support and these characteristics. ResultsThe support for the different viewpoints varied between 46.8% and 57.7% of the sample. Viewpoint support was associated with participants’ age, gender, educational level, financial situation, healthcare utilization, opinion on the responsibility of the government for the health of citizens, and opinion on whether the increase in healthcare expenditure and health insurance premiums is considered a problem. ConclusionResistance to active disinvestment may partially be explained by the consequences of disinvestment citizens anticipate experiencing themselves. Citizens considering the increase in healthcare expenditure a larger problem were more supportive of disinvestment than those considering it less of a problem.

Cost stickiness and the firm\u2019s organizational form: evidence from the property-liability insurance sector

We examine the existence of cost stickiness in the German property-liability insurance sector by analyzing if the percentage increase in administrative costs for a rise in premiums is larger than the percentage decrease in administrative costs for an equivalent drop in premiums. In addition, we analyze if sticky cost behavior depends on insurance firms’ organizational form. Using company-level data from German property-liability insurance firms for the years 2001–2017 and regression analyses, we find that administrative costs are sticky in the insurance sector, as administrative costs increase on average 0.82% per 1% increase in premiums but decrease only 0.6% per 1% decrease in premium income. Moreover, we find that stock insurers exhibit lower levels of cost stickiness, indicating better monitoring mechanisms.

Learning about the persistence of recessions under ambiguity aversion

The equity premium increased greatly in the Great Recession and the COVID-19 recession. To explain the magnitude of the increase, this paper proposes a theoretical model where the representative investor is ambiguity averse towards the uncertainty over the persistence of recessions. Results show that ambiguity aversion, as opposed to risk aversion, is the key ingredient to match the sharp increase in the equity premium. Specifically, the effect of ambiguity aversion on the equity premium is asymmetric across economic expansions and recessions. By contrast, an increase in risk aversion results in weaker countercyclical variation in the equity premium.

Generics and Biosimilars: Barriers and Opportunities

Generics and Biosimilars: Barriers and Opportunities

On the feasibility of reverse mortgages in Colombia

PurposeThe Colombian Government proposed a reverse mortgage mechanism to complement retirement income in Colombia. This paper aims to study its feasibility by valuing its premia.Design/methodology/approachUnder a reverse mortgage scheme, banks issue put options on an owner’s home. To value the option, the authors apply a risk-neutral canonical approach modeling its three sources of risk: home future value, interest rate levels and homeowner life expectancy.FindingsIn all, premia values do not seem too high. However, if future interest rates are above the simulations or home appreciation is below its historical behavior, the premia could sharply increase, jeopardizing the system viability. Limiting the loan-to-home-value ratio or fixed-term annuities are feasible alternatives to keep premium increases at bay. Complementary mechanisms may also help.Research limitations/implicationsThe home price and interest rate path estimation do not include inflation dynamics; in recent years inflation level was very low. However, the future does not offer any warrants. Future research also should cap the maximum loss the bank can endure. The pandemic may cause demographic changes affecting the viability of the reverse mortgage (R.M.) program in Colombia.Practical implicationsBased on the analysis, this work suggests possible government policies to help creditors and to maintain bank risks at a reasonable level.Social implicationsAn adequate reverse mortgage program may help the policymakers in Colombia to face the adverse environment for Colombia’s housing market and the pressure of its pension system. A good R.M. program generates incentives to purchase homes, given the possibility of receiving an additional rent after retirement.Originality/valueThe paper develops an econometrical improvement over previous work. The authors present a time-series analysis that includes stationarity and co-integration information to model the data-generation process of house prices and interest rates in a multivariate fashion. The authors also improve the valuation formula. Moreover, the paper presents a novel application to Colombia. The authors obtain our demographic data from the United Nations Population Division applying the Lee-Carter method to model mortality rates, which provides ample possibilities to extend reverse mortgage assessment to additional. Finally, this is the first scholarly effort to evaluate the R.M. for the Colombian case.

Formulary tiers, medication cost sharing, and transparency in bronze and silver qualified health plans in 2014 vs 2018.

BACKGROUND: In 2014, qualified health plans sold in the Affordable Care Act (ACA) marketplaces were accused of providing drug coverage that was too restrictive and costly. After the change in administration in 2016, efforts to repeal portions of the ACA led to increases in premiums, decreases in enrollment, and overall uncertainty. OBJECTIVE: To examine how the number of formulary tiers and medication cost sharing, as well as transparency around these aspects, in qualified bronze and silver health plans in California, Florida, and Illinois changed from 2014 to 2018. METHODS: A search of all bronze and silver qualified health plans in California, Florida, and Illinois was performed in 2014 and in 2018 through the marketplace and issuer websites. RESULTS: From 2014 to 2018, the total number of bronze and silver qualified health plans offered in California, Florida, and Illinois remained relatively stable (36 to 35, 123 to 122, and 60 to 74, respectively). Over the same time period, the median number of formulary tiers remained constant for California and Florida (four and five) and increased from five to seven for Illinois. Of note, most Illinois plans shifted from a formulary with five or fewer tiers (92% of plans) to seven tiers (73% of plans) between 2014 and 2018. There was also an increase in the use of coinsurance instead of copay for each of the four following formulary tiers: generic (19% to 27% of plans), preferred brand (21% to 38%), nonpreferred brand (33% to 52%), and specialty (76% to 91%). Additionally, there was an increase in the median coinsurance rates for each of the aforementioned tiers: 0% to 25%, 0% to 35%, 30% to 40%, and 30% to 40%, respectively. The proportion of plans that provided their formularies on the marketplace website increased from 82% to 97% from 2014 to 2018, with the increase mostly driven by California plans (0% to 80%). There was a small increase in the proportion of plans that reported medication cost sharing through the medical benefit from 2014 (19%) to 2018 (25%). CONCLUSIONS: Between 2014 and 2018, qualified health plans increased their use of formularies with greater numbers of tiers, the use of coinsurance for each tier, and higher coinsurance rates. Availability of formularies on marketplace websites increased, but cost sharing transparency for medications covered by the medical benefit could greatly improve. DISCLOSURES: No funding supported this study. Hung reports past employment by Blue Cross Blue Shield Association, CVS Health, and a grant from PhRMA outside of the submitted work. She was an intern at the Biotechnology Industry Organization when this work began. Sauvageau has no disclosures. This work was presented as a poster at the AMCP 2018 Managed Care & Specialty Pharmacy Annual Meeting; April 23-26, 2018; Boston, MA.

Sustainable investing with ESG rating uncertainty

This paper analyzes the asset pricing and portfolio implications of an important barrier to sustainable investing: uncertainty about the corporate ESG profile. In equilibrium, the market premium increases and demand for stocks declines under ESG uncertainty. In addition, the CAPM alpha and effective beta both rise with ESG uncertainty and the negative ESG-alpha relation weakens. Employing the standard deviation of ESG ratings from six major providers as a proxy for ESG uncertainty, we provide supporting evidence for the model predictions. Our findings help reconcile the mixed evidence on the cross-sectional ESG-alpha relation and suggest that ESG uncertainty affects the risk-return trade-off, social impact, and economic welfare.

Assessing the Impact of Covid-19 Pandemic on Emerging Market Economies' (EMEs) Sovereign Bond Risk Premium and Fiscal Solvency.

The current globalized economic environment has made Emerging Market Economies (EMEs) highly exposed to global economic shocks. During the Covid-19 pandemic, EMEs have been facing increased health costs and heightened demand for fiscal stimulus. In addition, most EMEs experienced currency depreciation, reversal in capital flow, decrease in global demand and significant decline in domestic revenue, leading to a potential increase in sovereign bond risk premiums (SRP). Using dynamic panel estimations and focusing on 12 countries, we find that the Covid-19 pandemic impacts SRP primarily through GDP growth and political stability indicators. In addition, we find the real exchange rate and net export to GDP ratio have a statistically significant impact on sovereign bond risk premium.

Heterogeneous effects of consolidation on premiums in Medicare Part D

Medicare Part D plans provide prescription drug coverage to 45 million seniors. The recent past has seen significant consolidation amongst plan providers, notable CVS's 2018 acquisition of Aetna and Cigna's 2018 acquisition of Express Scripts. In this paper, we analyze the effect of consolidation of standalone Part D plan providers on premiums using plausibly exogenous variation in concentration induced by the 2011 merger between CVS and Universal American. We find that the increase in concentration for standalone Medicare Part D plans that resulted from this merger led to higher average premiums, a total of nearly $170 million per year. We find further that, consistent with the assumptions behind standard antitrust practice, the effects of the increase in concentration were heterogeneous: moderately (or more) concentrated markets that saw a meaningful increase in concentration saw significant increases in premiums, while premiums in other markets did not change significantly.

The Effect of Monthly Cost‐Sharing Limits on Out‐of‐Pocket Costs for Privately Insured Patients

Research ObjectiveDespite the Affordable Care Act increasing access to health insurance for millions of previously uninsured Americans, underinsurance is a persistent problem. A key contributor to underinsurance is growing enrollment in high deductible health plans for those on the health insurance exchanges and in employer‐sponsored health plans. Because annual deductibles do not reflect the economic realities of how people are paid or how they pay for other expenses, it is worthwhile to consider alternatives to annual cost‐sharing limits as an option for improving access to care.Study DesignWe used the 2018 IBM MarketScan® Commercial Claims and Encounters database to assess changes in patient out‐of‐pocket and plan spending under either a $250 or $500 in‐network monthly out‐of‐pocket maximum. We also estimated spending assuming uncapped out‐of‐network costs or with $500 or $1,000 monthly out‐of‐network out‐of‐pocket maximums. We calculated the percentage of enrollees who would benefit from each scenario and share of total costs shifted back to plans as a percentage of total health care spending under each scenario.Population StudiedThose under age 65 who were enrolled for the full year, excluding those in HMO or POS with capitation plans.Principal FindingsEnrollee annual mean and highest month mean out‐of‐pocket costs decreased in all scenarios. For in‐network care, annual mean out‐of‐pocket costs fall by $380 (49%) under a $250 monthly cap and by $269 (35%) under a $500 monthly cap. For out‐of‐network care, annual savings averaged 35% and 22% under the $500 and $1,000 out‐of‐network caps, respectively. When considering savings for the highest month of out‐of‐pocket costs, representing peak burden of cost‐sharing, we estimated mean patient spending decreases between 48% and 68% (from $480 under the status quo). The percentage of enrollees benefitting from these monthly caps ranges from 23% to 37% and the portion of total health care costs shifted from enrollees back to plans ranges from 4% to 7%. The latter estimate reflects potential increases in premiums expected as a result of such a policy change, absent any behavioral effects on health care use.ConclusionsInstead of a large annual deductible, plans could spread the annual deductible over the year to improve affordability for patients. Patients with acute illnesses could get necessary care without facing a deductible that is more than their monthly take‐home pay, and those with chronic needs would be better able to spread their costs throughout the year instead of facing a single large bill at the beginning of every year. There may be some increases in so‐called inefficient health care use, commonly referred to as moral hazard, due to lower cost‐sharing; however, there is a practical limit to the amount of care that can be scheduled within one month. Conversely, under the current annual cost‐sharing limits, patients who reach their out‐of‐pocket maximum early have the opportunity to use care with no cost‐sharing for a substantial portion of the year.Implications for Policy or PracticeMonthly cost‐sharing limits could improve affordability of care for those in high‐deductible health plans.

The Unlikely Pressure for Accountability: The Insurance Industry’s Role in Social Change

The summer of 2020 witnessed a national reckoning: the murder of George Floyd and the resulting unprecedented Black Lives Matter (BLM) protests. As the BLM movement gained unsurpassed traction, corporate America jumped to show support: nearly 70% of the five hundred largest companies made statements in support of racial justice and more than a third provided financial donations to racial justice organizations/causes. Countless companies made public promises regarding their commitment to diversity, equity, inclusion, and justice (DEIJ) within their organizations. However, companies have largely failed to live up to those promises. The result—a frenzy of diversity driven derivative suits against boards and officers for that failure. Although Director and Officer (DO as premiums increase, limits are lowered, and coverage is dropped, the possibility of a new catalyst for accountability arises—the D&O insurance industry.

Skill-Biased Structural Change

AbstractUsing a broad panel of advanced economies, we document that increases in GDP per capita are associated with a systematic shift in the composition of value added to sectors that are intensive in high-skill labour, a process we label as skill-biased structural change. It follows that further development in these economies leads to an increase in the relative demand for skilled labour. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the U.S. and a set of ten other advanced economies, over the period 1977 to 2005. For the U.S., we find that the sector-specific skill neutral component of technical change accounts for 18–24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill-biased structural change.

THE ROLE OF GENDER IN EMPLOYMENT POLARIZATION

AbstractWe document that U.S. employment polarization in the 1980–2017 period is largely generated by women. In addition, we provide evidence that the increase of employment shares at the bottom of the skill distribution is generated in market sectors producing services representing home production substitutes. We use a calibrated macroeconomic model to show that a rising skill premium induces high‐skilled women to participate more in the labor market, reduce home working hours, and demand more home substitutes in the market, thus fostering a rise in employment shares at the bottom of the skill distribution. Counterfactual experiments suggest that without the large increase in the skill premium of high‐skilled women, employment polarization would have been substantially reduced, and changes of employment shares at the bottom of the distribution would have been negative.