Issue Information: Journal of Risk and Insurance 1/2024
Wiley Online Library » Journal of Risk and Insurance
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1w ago
Journal of Risk and Insurance, Volume 91, Issue 1, Page 1-3, March 2024 ..read more
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Call For Papers
Wiley Online Library » Journal of Risk and Insurance
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1w ago
Journal of Risk and Insurance, Volume 91, Issue 1, Page 249-249, March 2024 ..read more
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More options, more problems? Lost in the health insurance maze
Wiley Online Library » Journal of Risk and Insurance
by Christian Biener, Lan Zou
2w ago
Abstract While the opportunity to choose from a diverse range of options can be advantageous, consumers often struggle to make optimal decisions in the domain of health insurance. In this study, we examine the effects of decision aids on improving choice optimality in a health insurance setting that allows for variations in coverage but is standardized otherwise. While this relatively simplistic setting theoretically implies optimal conditions for observing large fractions of optimal choices, we observe widespread adoption of non-welfare-maximizing plans, with at least 36% of the population wi ..read more
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Multiperiod peer‐to‐peer risk sharing
Wiley Online Library » Journal of Risk and Insurance
by Samal Abdikerimova, Tim J. Boonen, Runhuan Feng
3w ago
Abstract Risk sharing has been practiced in various forms in the financial industry. This paper is the first to study both dynamic and static risk-sharing mechanisms for a group of participants over multiple periods. The design of risk-sharing strategies is based on the Pareto optimization of quadratic utilities of participants' reserves. Such a framework builds a connection between portfolio optimization in the finance literature and that for risk sharing in the insurance literature. Building on the most common form of reinsurance—pro rata treaties, we propose a peer-to-peer (P2P) network for ..read more
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A behavioral gap in survival beliefs
Wiley Online Library » Journal of Risk and Insurance
by Giovanna Apicella, Enrico G. De Giorgi
1M ago
Abstract Life span uncertainty (longevity risk) impacts several economic decisions. Individuals can form and revise their survival beliefs making use of behavioral heuristics. We propose a model of sentiment, in which individuals are assumed to switch between optimistic and pessimistic expectations of their health. When optimism is persistent in the face of health shocks, or when individuals are more likely to change their sentiment from pessimistic to optimistic than otherwise, our model predicts survival underestimation at young ages and overestimation at old ages. An empirical analysis base ..read more
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Availability of the seat belt defense: Implications for auto liability insurance
Wiley Online Library » Journal of Risk and Insurance
by Patricia Born, J. Bradley Karl, Charles Nyce
1M ago
Abstract A “seat belt defense” allows a defendant in a third-party auto liability event to present evidence of seat belt nonuse to reduce a plaintiff's recovery. When successfully applied, the defense has a direct effect on reducing liability payouts by insurers for accidents. Our analysis reveals that seat belt defense laws are associated with a 10% reduction in auto claims costs, which equates to a reduction in loss costs of approximately $14 per insured vehicle. We find little evidence that the defense reduces accident frequency and no evidence that the defense affects seat belt usage. The ..read more
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Annuity selection in the presence of insurer default risk and government guarantees
Wiley Online Library » Journal of Risk and Insurance
by Pamela Searle, Peter Ayton, Iain Clacher
1M ago
Abstract We investigate whether individuals correctly assess the risk of default of annuity providers and incorporate this information into their decision-making when purchasing an annuity. To do so, we analyze actual retirement product choices from a large administrative data set from Chile and exploit an exogenous change that decreased the coverage of government guarantees against annuity provider default. If individuals are rational and properly incorporate default risk into their decision process then, before this change, individuals should choose riskier providers that give higher annuity ..read more
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How does health spending among demographic groups compare to Affordable Care Act premium regulations?
Wiley Online Library » Journal of Risk and Insurance
by Caroline Hanson, Alexandra Minicozzi
2M ago
Abstract The Affordable Care Act (ACA) substantially altered regulations in the nongroup and small group health insurance markets and those markets continue to receive significant policy attention. To understand how those markets have functioned in recent years and how they would be impacted by policy changes, we estimated enrollment and spending by age and sex using claims data covering enrollment in ACA risk-adjusted plans in 2017–2019 and compared spending to a federal default age-rating curve for premiums. Our results suggest that women aged 55–64 helped stabilize the nongroup market throu ..read more
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The effect of weather index insurance on social capital: Evidence from rural Ethiopia
Wiley Online Library » Journal of Risk and Insurance
by Halefom Yigzaw Nigus, Eleonora Nillesen, Pierre Mohnen
2M ago
Abstract We study the effect of weather index insurance (WII) uptake on social capital. We measure individual social capital using experimental and survey-based measures and relate it to the actual purchase of WII. We use propensity score matching (PSM) and an instrumental variable (IV) to address endogeneity concerns. Our descriptive and PSM estimates show that WII uptake negatively and significantly affects social capital. We find that insured households contribute less to the public good than uninsured households. We also find qualitatively and quantitatively similar results using our IV&nb ..read more
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Practical guideline to efficiently detect insurance fraud in the era of machine learning: A household insurance case
Wiley Online Library » Journal of Risk and Insurance
by Denisa Banulescu‐Radu, Meryem Yankol‐Schalck
3M ago
Abstract Identifying insurance fraud is a difficult task due to the complex nature of the fraud itself, the diversity of techniques employed, the rarity of fraud cases observed in data sets, and the relatively limited allocation of human, financial, and time resources to carry out investigations. The aim of this paper is to provide a clean and well structured study on modeling fraud on home insurance contracts, using real French data from 2013 to 2017. Several methods are developed to identify risk factors and unusual customer behaviors. Traditional econometric models as well as new machine-le ..read more
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