Renewable Premium Research Articles

Impact of renewables on the Peruvian electricity system

Peru is committed by international agreements such as the Paris Agreement and the UN 2030 Agenda for Sustainable Development to reduce its Green House Gas (GHG) emissions. Although Peru began promoting power plant projects based on renewable energies in 2008, the institutional impulse seems to have ceased today. Nonetheless, adopting renewable energy sources not only aids in fulfilling these commitments but also reduces electricity prices, fostering a more competitive economy. This study aims to provide a thorough analysis and evaluation of the impact that integrating Non-Conventional Renewable Energy Resources (NCRER) has on Peru's wholesale electricity market. Specifically, it focuses on the net total savings for the system, calculated as the difference between the reduction in energy costs traded and the cost of the renewable premium. To reach that goal a simplified yet analytical tool has been developed based on a multivariable regression of the real data of the market. The volume of natural gas not consumed and the volume of GHG emissions avoided will also be evaluated. The results show that based on the 2021 scenario, a NCRER share of 28.26 % would lead to a net saving for the final users of 316.04 MUSD in the annual energy traded in the market. The reduction of conventional thermal generation prevents the annual burning of 2.04 normal km3 of natural gas and the emission of 4.99 million tons of CO2-eq. To the authors' knowledge, this is the first time that the impact of NCRER production in the Peruvian electricity system has been quantitatively evaluated.

Guaranteed renewability in health insurance: Taking into account changes in risk status and the cost of dying

Guaranteed renewability protects policyholders from reclassification risk. Being an important characteristic of social health insurance, the potential for private insurance markets is high given its property of competing with risk selection. Without regulation, since healthcare expenditures increase strongly near death, it seems questionable whether insurers will be able to sustain guaranteed renewability in the long run - rather than investing in risk selection activity, In this study, the authors extend the seminal model of Pauly et al. (1995) to include (1) policyholders with improving risk status over time, and (2) policyholders’ high cost of dying. The objective is to find out about the actuarially fair guaranteed renewable premium in realistic conditions when taking into account these two extensions.

Cross-Border Energy Exchange and Renewable Premiums: The Case of the Iberian System

In 2002, the European Union set a target of 10% electricity interconnection capacity for 2020: a target that has been further extended to 15% by 2030. Cross-border interconnection of regional/national electricity systems will allow the EU to enhance its security of supply and to integrate more renewables into energy markets. Although the EU has a common renewable directive, every Member State has its own renewable support policy. For the case of Spain, consumers pay the renewable premium in their electricity bills; however, consumers would not be overburdened if premiums were counter-balanced with the energy-cost reduction due to the merit-order effect of renewables. When two markets are interconnected, the energy exchange through the interconnection yields certain expected rent transfers due to the market rules. However, this exchange is also accompanied by other unforeseen rent transfers related to the regional/national policies on renewables. To the authors’ knowledge, the identification and quantification of these indirect rent transfers has not been previously addressed. This paper analyses and quantifies how the premiums on regional/national renewables are distributed between neighbouring countries through cross-border exchanges. The analysis focuses on the Iberian/Spanish system and its neighbours, although the methodology could be extended to other systems. To this end, data on the market and premiums has been considered, as well as the exchanges between France, Spain, Portugal, and Morocco, for the years 2015–2017. The main finding of this work is that the Spanish system, due to the lack of a coordinated/harmonized renewable premium policy, has been “importing” about 40 M€/year of renewable premium from France and 17 M€/year from Portugal while “exporting” about 66 M€/year towards the Moroccan systems.

Financial and non-financial drivers of insurance sector in an emerging economy

This paper identifies key factors that drive and impede the growth of the insurance sector in India. Emerging economies have huge growth potential. India is an economy that attracts opportunities for growth. The growth pattern in the last ten years is discussed highlighting a huge influx of foreign funds to the country, and benefits and challenges to stakeholders, and extent of oversights on insurance firms. Using the finance data from all the 23 insurance firms in India for the period from 2005 to 2014, we find that the growth in insurance sectors is related to first year and renewal premiums, commission and operating ratios, individual and corporate agents, offices, capital and assets, and profits, and is not related to new products, investment income and claims ratio. The sector's contribution to economic growth is also shown. The findings have ramifications for the sector's providers, regulators and investors.

PERUMUSAN PREMI BULANAN ASURANSI KESEHATAN INDIVIDU PERAWATAN RUMAH SAKIT (ANUITAS HIDUP PEMBAYARAN BULANAN)

This study calculates non renewable monthly premiums and renewable monthly premiums for health insurance. Formulations used in this study were derived from the equations used by Wilandari (2007). The monthly premium calculation uses a CSO mortality table and an interest rate of 6%. To illustrate the calculating of the premium it is assumed that a family consist of a father, a mother and a son, respectively with age 40, 36 and 9 years old. The results obtained were that the total premium is paid amounted to Rp. 155.02,00 every month for 20 years. Benefit for the cost of room, doctor visits, and the cost of care respectively were Rp. 200.000,00 per day, Rp. 75.000,00 per day and Rp. 4.000.000,00 per periode. Average duration of treatment was 180 days. The renewable monthly premium was paid in different amounts each year, with the range from Rp. 80.425,00 to Rp. 406.465,00. From this study, Although initially the renewable premium is cheaper than the non renewable premium, at the end it is more expensive than the non renewable premium. In this study it was obtained too that 12 times the monthly premium is greater than 1 times the annual premium.

An energy pricing scheme for the diffusion of decentralized renewable technology investment in developing countries

The purpose of this paper is to investigate price support for market penetration of renewable energy in developing nations through a decentralized supply process. We integrate the new decentralized energy support: renewable premium tariff, to analyze impacts of tariff incentives on the diffusion of renewable technology in Senegal. Based on photovoltaic and wind technologies and an assessment of renewable energy resources in Senegal, an optimization technique is combined with a cash flow analysis to investigate investment decisions in renewable energy sector. Our findings indicate that this support mechanism could strengthen the sustainable deployment of renewable energy in remote areas of Senegal. Although different payoffs emerged, profits associated with a renewable premium tariff are the highest among the set of existing payoffs. Moreover in analyzing impacts of price incentives on social welfare, we show that price tariffing schemes must be strategically scrutinized in order to minimize welfare loss associated with price incentives. Finally we argue that a sustainable promotion of incentive mechanisms supporting deployment of renewable technology in developing nations should be carried out under reliable institutional structures. The additional advantage of the proposed methodology is its ability to integrate different stakeholders (producers, investors and consumers) in the planning process.

Bivariate analysis of survivorship and persistency

Voluntary non-payment of premiums leads to policy termination. When policies are terminated, it is costly to several parties of insurance contracts. These costs include the inability of the insurance company to recover acquisition expenses, loss of income from renewal premiums by the insurance agent, and the loss of premiums paid and insurance coverage by the contractholder. While most of these costs can be directly accounted for, there is the additional hidden cost resulting from mortality selection. This refers to the tendency of contractholders who are generally healthier to select against the insurance company by voluntarily terminating their policies. This paper explores a methodology to quantify the cost of mortality selection and to examine for the presence of such selection. While standard actuarial models of survivorship and persistency consist of specifying distributions for times until death and withdrawal, the typical assumption is that these random times are independent. We will use a more general approach of specifying the bivariate distributions using copulas for these random times without having to assume independence. We demonstrate procedures to estimate parameters in the model, and we show how one can use these estimates to predict more accurate future cash flows.

THE FLOW OF NET CASH SAVINGS THROUGH LIFE INSURANCE COMPANIES*

s of Doctoral Dissertations 83 ing the protective (term and group) rather than the savings element will tend to lessen the flow of payments to policyholders and total expenditures in periods of economic distress. A second set of conclusions drawn from this study has to do with the statistical relation of insurance flows to disposable personal income. Are the component insurance flows rigid in relation to annual changes in disposable personal income? It was found that total income and its component flows (with the exception of first year's premiums), and net income, moved in the same direction as disposable personal income. The coefficients of correlation are very high, more than .9. Insurance saving, therefore, was not perverse. Second, were the annual movements of total income and its components, and net income, as sensitive as those of disposable personal income? Renewal premiums, the investment income flows, and total premiums, because of their contractual nature, were not as sensitive as disposable personal income. But net saving through life insurance (net income) was more sensitive than disposable personal income because of the heavy outflow of payments to policyholders (an expenditure flow) during depressions and recession. Saving through life insurance dropped much more rapidly between 1929 and 1932 than disposable personal income. Saving through life insurance was much less sensitive than personal saving during the Great Depression. Saving through life insurance was positive while personal saving was negative. This content downloaded from 207.46.13.176 on Mon, 20 Jun 2016 06:17:34 UTC All use subject to http://about.jstor.org/terms

Life Office Accounts

The actual system of book-keeping used by an office will depend on many factors, such as the volume of business transacted, the departments into which the office is divided and the scope of their work, and the information required to be produced. This paper deals mainly with premium income accounts, as the production of the revenue account figure for premiums is more complex than that of other revenue items, and as more departments in an office are concerned with premiums in one connexion or another than with the other revenue items. The object of the paper is, therefore, to show the relationship between the requirements of various departments, i.e. the accountants, the valuation (Actuarial) department, the departments concerned with issuing policies, with collecting renewal premiums and with settling claims and surrenders, etc., and the different aspects peculiar to each. For instance, the accountants require premiums to be classified according to funds, e.g. Life, Annuity or Capital Redemption, whereas the department concerned with the collection of premiums requires them to be classified according to the method of renewal, e.g. monthly or non-monthly, or terms of non-forfeiture. The actual books of account will not be described in great detail but only the principal objects that are required of each book, which would be ruled to suit the workings of the office; and the specimen headings given in the Appendices to the paper are merely to illustrate the system of book-keeping being described, which relates to an Ordinary Life Office.

Analysis and Apportionment of the Expenses of Management of a Life Office with a view to ascertaining the Office Premium Loadings

In 1907 I had the honour of reading before the Institute a paper dealing with the Comparative Bonuses under Whole-Life and Endowment Assurances, and therein I pointed out that the method of apportioning the expenses between the two classes had a considerable effect upon the rates of bonus, and in the discussion more than one speaker referred to the relative premiums as vitally affecting the conclusions to be drawn from any investigation. The solution of the first problem will, mortality apart, also give us the key to the rates of premium which an office should charge for Whole-Life and Endowment Assurances respectively. As the premiums are the foundation of our business it is of the utmost importance that an analysis of the expenses should be made periodically in order to ascertain the adequacy of the remuneration the office receives for the risks it undertakes. The question of the office premiums has been frequently discussed, but I do not think any paper has been submitted to this Institute in which an agreement has been shown between the loadings adopted in obtaining the office premiums and the actual expenses of the office. The object of the paper is to elicit the views of the profession upon this subject.The commission paid by the majority of offices is, for the principal classes of Assurance, usually a percentage of the sum assured on payment of the first annual premium and a percentage of the office renewal premiums. The loading required to provide for the commissions is therefore easily ascertained and requires no discussion.

The Influence of Expenses and Selection on Reserves for recently-effected Policies

In a paper read before the Actuarial Society of Edinburgh more than thirty years ago, the late Mr. D. Deuchar discussed the question of expenses and its relation to new business, and advocated the subdivision between new and renewal premiums of the items Premiums received, Expenses, and Commission in the revenue account. From a table compiled by him, relating to fifteen Scottish offices, it appeared that commission and expenses amounted to 13¼ per cent of the premium income; or that, if 7¼ per cent be allowed for renewal expenses, initial expenditure absorbed about 80 per cent of the (estimated) new premiums. The question subsequently received much attention from Dr. Sprague, who stated (J. I. A., xix, 313) that about 7½ per cent of renewal premiums was “generally amply sufficient for the purpose of administering the existing business of a company that pays commission and employs agencies; and that any expenditure beyond this must be considered as incurred exclusively on account of the new business”; while more recently (Transactions of the First International Congress of Actuaries, p. 190) he has expressed the opinion that “the average expenditure of prosperous and well-managed offices may be taken as 80 per cent of the new premiums and 7½ per cent of the renewal premiums”.