scholarly journals Multidimensional Private Information, Market Structure and Insurance Markets

2016 ◽  
Author(s):  
Hanming Fang ◽  
Zenan Wu
Keyword(s):  
Market Structure ◽  
Private Information ◽  
Insurance Markets ◽  
Information Market

scholarly journals Pricing and Welfare in Health Plan Choice

2012 ◽  
Vol 102 (7) ◽  
pp. 3214-3248 ◽  
Author(s):  
M. Kate Bundorf ◽  
Jonathan Levin ◽  
Neale Mahoney
Keyword(s):  
Private Information ◽  
Econometric Model ◽  
Welfare Cost ◽  
Insurance Markets ◽  
Health Plan Choice ◽  
Risk Rating ◽  
Health Insurance Markets ◽  
Plan Choice ◽  
Using Data ◽  
Small Employers

Premiums in health insurance markets frequently do not reflect individual differences in costs, either because consumers have private information or because prices are not risk rated. This creates inefficiencies when consumers self-select into plans. We develop a simple econometric model to study this problem and estimate it using data on small employers. We find a welfare loss of 2–11 percent of coverage costs compared to what is feasible with risk rating. Only about one-quarter of this is due to inefficiently chosen uniform contribution levels. We also investigate the reclassification risk created by risk rating individual incremental premiums, finding only a modest welfare cost. (JEL G22, I13, I18)

Adverse Selection, Private Information, and Lowballing in Insurance Markets

1990 ◽  
Vol 63 (2) ◽  
pp. 145 ◽  
Author(s):  
Stephen P. D'Arcy ◽  
Neil A. Doherty
Keyword(s):  
Adverse Selection ◽  
Private Information ◽  
Insurance Markets

scholarly journals MARKET STRUCTURE, SECURITY PRICES, AND INFORMATIONAL EFFICIENCY

1997 ◽  
Vol 1 (1) ◽  
pp. 169-205 ◽  
Author(s):  
JENNIFER HUANG ◽  
JIANG WANG
Keyword(s):  
Market Structure ◽  
Private Information ◽  
Equity Premium ◽  
Price Volatility ◽  
Securities Market ◽  
Informational Efficiency ◽  
Derivative Securities ◽  
Security Prices ◽  
Market Structures

We consider an economy with an incomplete securities market and heterogeneously informed investors. Each investor trades in the market to hedge the risk to his endowment and to speculate on future security payoffs using his private information. We examine the efficiency of the securities market in allocating risk and transmitting information under different market structures, as defined by the set of securities traded in the market. We show that the introduction of derivative securities can decrease the market's efficiency in revealing information on security payoffs, and increase the equity premium and price volatility in the market.

Market structure, efficiency and profitability of insurance companies in Ghana

2015 ◽  
Vol 10 (4) ◽  
pp. 648-669 ◽  
Author(s):  
Abdul Latif Alhassan ◽  
George Kojo Addisson ◽  
Michael E. Asamoah
Keyword(s):  
Market Structure ◽  
Life Insurance ◽  
Insurance Industry ◽  
Consumer Welfare ◽  
Insurance Market ◽  
Insurance Companies ◽  
Insurance Markets ◽  
Ample Evidence ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of the regulatory-driven market structure on firm pricing behaviour by testing the structure-conduct-performance (S-C-P) hypothesis for both life and non-life insurance markets in Ghana. Design/methodology/approach – Using a panel data on 14 life and 22 non-life insurers from 2007 to 2011, the authors employed the Herfindahl Hirschman Index and concentration ratio as proxies for the S-C-P hypothesis while efficiency scores were estimated using the data envelopment analysis technique to proxy for the efficient structure (ES) hypothesis. The dependent variable, profitability was measured as return on assets while controlling for size, underwriting risk, leverage, GDP growth rate and inflation. The models were estimated using the panel corrected standard errors of Beck and Katz (1995) and random effects estimations. Findings – The results from the empirical estimation provide ample evidence in support for ES hypothesis for both life and non-life insurance markets. While conflicting results was found for SCP hypothesis in the non-life insurance market, it was rejected in the life insurance market. The findings also point to an increasing level of competition in both life and non-life insurance industry in Ghana though they still remain concentrated with the life insurance sector having high levels of efficiency compared to the non-life sector. Practical implications – The findings of the study will enhance the understanding of firm behaviour in the new markets created to shape regulatory and competition policies of the regulator to promote consumer welfare while ensuring a stable industry to enhance its role in economic development. Originality/value – This is the first study to test the market power and efficient hypotheses on the insurance industry in Ghana. To the best of the author’s knowledge, this study is the first to examine the determinants of profitability in the non-life insurance market.

scholarly journals Asymmetric information in secondary insurance markets: Evidence from the life settlements market

2020 ◽  
Vol 11 (3) ◽  
pp. 1143-1175
Author(s):  
Daniel Bauer ◽  
Jochen Russ ◽  
Nan Zhu
Keyword(s):  
Asymmetric Information ◽  
Life Expectancy ◽  
Life Insurance ◽  
Private Information ◽  
Economic Consequences ◽  
Insurance Markets ◽  
Term Survival ◽  
Informational Asymmetry ◽  
Life Settlements ◽  
Near Term

We use data from a large US life expectancy provider to test for asymmetric information in the secondary life insurance—or life settlements—market. We compare realized lifetimes for a subsample of settled policies relative to all (settled and nonsettled) policies, and find a positive settlement‐survival correlation indicating the existence of informational asymmetry between policyholders and investors. Estimates of the “excess hazard” associated with settling show the effect is temporary and wears off over approximately 8 years. This indicates individuals in our sample possess private information with regards to their near‐term survival prospects and make use of it, which has economic consequences for this market and beyond.

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