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1994

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Articles 1 - 23 of 23

Full-Text Articles in Insurance

Input Demand Under Yield And Revenue Insurance, Bruce A. Babcock, David A. Hennessy Dec 1994

Input Demand Under Yield And Revenue Insurance, Bruce A. Babcock, David A. Hennessy

CARD Working Papers

The question of how insurance programs affect agricultural input use is commanding increasing attention. Previous studies disagree on the likely effects of insurance on fertilizer application rates. Whether insurance is a complement or a substitute for fertilizer depends, in part, on whether the probability of low yields is positively or negatively affected by increased fertilizer rates. This study uses field-level data measuring the response of corn yields to nitrogen fertilizer to determine if the technical relationship between yield and nitrogen fertilizer supports the hypothesis that crop insurance or revenue insurance could induce increased application rates. Our results indicate no support ...


Price Cutting In Liability Insurance Markets, Scott. E. Harrington, Patricia. M. Danzon Oct 1994

Price Cutting In Liability Insurance Markets, Scott. E. Harrington, Patricia. M. Danzon

Health Care Management Papers

This article analyzes alleged underpricing of general liability insurance prior to the mid-1980s liability insurance "crisis." The theoretical analysis considers whether moral hazard and/or heterogeneous information for forecasting claim costs can cause some firms to price too low and depress other firms' prices. Cross-sectional analysis of insurer loss forecast revisions (which should be greater for firms with low prices caused by moral hazard or hetero- geneous information) and premium growth provides evidence consistent with low pricing due to moral hazard but not heterogeneous information. The evidence also implies that shifts in the loss distribution produced large industrywide forecast errors.


Review Of: Making Decisions About Liability And Insurance (Colin Camerer & Howard Kunreuther Eds.), Joseph M. Carreiro Jr. Sep 1994

Review Of: Making Decisions About Liability And Insurance (Colin Camerer & Howard Kunreuther Eds.), Joseph M. Carreiro Jr.

RISK: Health, Safety & Environment (1990-2002)

Review of: Making Decisions about Liability and Insurance (Colin Camerer & Howard Kunreuther eds., Kluwer Academic Publishers 1993). Figures, index, notes, tables. ISBN 0-7923-9393-7 [139 pp. Cloth $89.95. 101 Phillip Drive, Assinippi Park, Norwell MA 02061.1


The Safety Net Of Farming: An Introduction And Literature Review Of Agricultural Insurance And Other Stabilization Policies And Proposals, Chad E. Hart, Darnell B. Smith Mar 1994

The Safety Net Of Farming: An Introduction And Literature Review Of Agricultural Insurance And Other Stabilization Policies And Proposals, Chad E. Hart, Darnell B. Smith

CARD Working Papers

With the pending debate on the 1995 Farm Bill, crop insurance and disaster assistance have become major topics for discussion. This paper explores the performance of the current MPCI program and presents alternative programs. The need for a unified approach to ease the problem of agricultural instability is addressed.


Faculty Regent Newsletter, Ray Mendel Feb 1994

Faculty Regent Newsletter, Ray Mendel

Board of Regents Documents

Newsletter created by faculty regent Ray Mendel to inform faculty members of WKU Board of Regents activities that affect them.


A Discussion Of Social Protection And Private Insurance, Gary S. Fields Jan 1994

A Discussion Of Social Protection And Private Insurance, Gary S. Fields

Articles and Chapters

[Excerpt] This is a thoughtful and thought-provoking paper, informative and interesting. I learned a lot from reading this and have already passed it on to others.

In my comments, I would like to do four things: highlight the major points and the rationale for them, raise a few quibbles, put forth some additional issues, and propose a possible resolution of a dilemma raised in the paper.

But let us first try to be clear about what we are talking about. Professor Pestieau characterizes social insurance as being mandatory, universal, and redistributive. I would define it slightly differently: “Social insurance is ...


An Introduction To Individual Disability Income Insurance, Mark J. Chartier Jan 1994

An Introduction To Individual Disability Income Insurance, Mark J. Chartier

Journal of Actuarial Practice 1993-2006

There are several actuarial software packages purporting to calculate expected benefit cash flows on disability income insurance policies. To the author's knowledge, however, there is no published text that explains how to perform these calculations. This paper is intended to fill this gap in the literature. It describes some of the more common techniques for pricing disability income insurance. Those techniques for which claim costs can be used and those for which the pricing actuary must project cash flows are identified.


Discussion Of Robert L. Brown's "Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver"*, Mark W. Campbell Jan 1994

Discussion Of Robert L. Brown's "Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver"*, Mark W. Campbell

Journal of Actuarial Practice 1993-2006

In the paper entitled "Tax Assistance to Qualified Retirement Savings Plans: Deferral or Waiver," Robert L. Brown concludes that "the nontaxation of investment income on qualified funds until taken is a tax waiver or tax subsidy from the government to participants of qualified plans". I believe, however, that this conclusion is based on flawed assumptions pertaining to:

• The behavioral responses of taxpayers to the withdrawal of such tax assistance;

• The definition of an appropriate benchmark tax system against which to measure the cost of such tax assistance; and

• The appropriate basis of comparison of alternative government tax revenue streams.

Using ...


Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver?, Robert L. Brown Jan 1994

Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver?, Robert L. Brown

Journal of Actuarial Practice 1993-2006

There exist significant tax incentives for retirement savings plans in Canada and the United States. Qualified employer and employee contributions, within limits, are tax deductible to the employer and nontaxable to the employee. Also, investment income is not taxed until taken. On the other hand, monies received from funds having such tax incentives are taxable in full as income to the recipient when taken. This paper analyzes the two tax advantages of qualified retirement savings plans: the tax deductibility of contributions and the nontaxation of investment income until it has been distributed. The algebraic analysis shows that the deductibility of ...


Reconciling Two Rate Level Indications: A Chain Rule Approach, Cheng-Sheng Peter Wu Jan 1994

Reconciling Two Rate Level Indications: A Chain Rule Approach, Cheng-Sheng Peter Wu

Journal of Actuarial Practice 1993-2006

The problem considered is that of reconciling two rate level indications that are based on several common factors, but have been made at different review periods. A popular approach to this problem is the so-called sequential replacement method, which calculates the impact of each individual factor. Unfortunately, this method has a serious deficiency: the estimated impact of a factor depends upon the order of the replacement. To counteract this defect, a new approach, called the chain rule approach, is developed. Using this approach, an explicit formula is given for calculating the impact and the marginal impact of each factor.


Journal Of Actuarial Practice, Volume 2, No.2, 1994, Colin Ramsay , Editor Jan 1994

Journal Of Actuarial Practice, Volume 2, No.2, 1994, Colin Ramsay , Editor

Journal of Actuarial Practice 1993-2006

ARTICLES

Disenrollment Patterns of Elderly in Managed Care and Fee for Service • Kenneth G. Manton, H. Dennis Tolley, Robert Newcomer, James C. Vertrees, and Charlene Harrington

Modeling Insurance Cash Flows for Universal Life Policies • Robert E. Hoyt

Modal Premium Factors in Ordinary Life Insurance • James B. Ross and Criss G. Woodruff

Predicting Automobile Insurance Multi-Regional Base Pure Premiums • Edward Nissan and Iskandar S. Hamwi

A Statistical Approach to IBNR Reserves • Bradford S. Gile

Safety First and Ambiguity • Lawrence A. Berger and Howard Kunreuther

Discussion of Robert L. Brown's "Tax Assistance to Qualified Retirement Savings Plans: Deferral or Waiver?" • Mark ...


Journal Of Actuarial Practice, Volume 2, No. 1, 1994, Colin Ramsay , Editor Jan 1994

Journal Of Actuarial Practice, Volume 2, No. 1, 1994, Colin Ramsay , Editor

Journal of Actuarial Practice 1993-2006

ARTICLES

Health Insurance Reform and its Effects on the Small Employer Market: A Review of H.R. 3626 • P. Anthony Hammond

An Introduction to Individual Disability Income Insurance • Mark J. Chartier

Cost Containment in Workers' Compensation: Evaluating Medical Fee Schedules • David L. Durbin and Barry I. Llewellyn

The Markov Chain Interest Rate Scenario Generator Revisited • Sarah L.M. Christiansen

Managing the Costs and Risks of Housing Finance: A New Role For Actuaries • Anthony Asher

Reconciling Two Rate Level Indications: A Chain Rule Approach • Cheng-Sheng Peter Wu

Tax Assistance to Qualified Retirement Savings Plans: Deferral or Waiver? • Robert L. Brown

Editor ...


Disenrollment Patterns Of Elderly In Managed Care And Fee For Service, Kenneth G. Manton, Dennis H. Tolley, Robert Newcomer, James C. Vertrees, Charlene Harrington Jan 1994

Disenrollment Patterns Of Elderly In Managed Care And Fee For Service, Kenneth G. Manton, Dennis H. Tolley, Robert Newcomer, James C. Vertrees, Charlene Harrington

Journal of Actuarial Practice 1993-2006

As the trend to provide health care through managed care facilities increases, the need to examine ,vhy insured individuals voluntarily terminate managed care coverage grows. Voluntary termination of coverage, or dis enrollment, has both social and fiscal implications. Particularly among the elderly, patterns of disenrollment likely are related to self assessment of care needs and levels of health. In this paper we examine the patterns of dis enrollment among elderly enrollees as a function of health status and disability. We focus on disenrollment patterns from an experimental prepaid extended care facility, called a social HMO (S/HMO) and compare this ...


Modeling Insurance Cash Flows For Universal Life Policies, Robert E. Hoyt Jan 1994

Modeling Insurance Cash Flows For Universal Life Policies, Robert E. Hoyt

Journal of Actuarial Practice 1993-2006

This paper develops a methodology that can be used by insurers to construct predictive models for their own insurance cash flows. The insurance cash flow components evaluated include premium flows, policy loans, and cash value surrenders. Also, the paper evaluates several hypotheses in the insurance literature that attempt to explain insurance cash flows. Though the results are theoretically consistent, they produce some interesting contrasts to findings of similar studies for whole life policies. For example, these results confirm that: (i) the credited rate strategy is important to policy performance; (ii) the emergency fund hypothesis appears to apply to policy loan ...


Health Insurance Reform And Its Effects On The Small Employer Market: A Review Of H.R. 3626, Anthony P. Hammond Jan 1994

Health Insurance Reform And Its Effects On The Small Employer Market: A Review Of H.R. 3626, Anthony P. Hammond

Journal of Actuarial Practice 1993-2006

This paper provides a detailed analysis of H.R. 3626, a bill that is intended to improve employers' and employees' access to health care. H.R. 3626 attempts to accomplish this through the use of guaranteed availability, community rating, and generous standard benefits. A migration model is used to analyze the impact of H.R. 3626. Using this model, it is shown that while improving the availability and affordability of health insurance, its rating restrictions increase premiums disproportionately for the majority of small employers. In addition, H.R. 3626 increases the number of uninsured small employers.


A Statistical Approach To Ibnr Reserves, Bradford S. Gile Jan 1994

A Statistical Approach To Ibnr Reserves, Bradford S. Gile

Journal of Actuarial Practice 1993-2006

This paper develops a three dimensional statistical approach to the estimation of the mean and the standard deviation of pure incurred but not reported (IBNR) reserves. This means that the time of occurrence, the reporting lag, and the claim severity are separately modeled. It is assumed that, beyond any fixed time t, the claim number development process is Poisson and that the severity of loss depends on the length of the reporting lag. Two key assumptions are made to simplify the estimation of model parameters: for a given reporting lag, (i) the conditional mean of the claim size is a ...


Cost Containment In Workers' Compensation: Evaluating Medical Fee Schedules, David L. Durbin, Barry I. Llewellyn Jan 1994

Cost Containment In Workers' Compensation: Evaluating Medical Fee Schedules, David L. Durbin, Barry I. Llewellyn

Journal of Actuarial Practice 1993-2006

Medical expenditures in workers' compensation programs have been subjected to few cost containment strategies. As workers' compensation costs have escalated, however, increasing attention is being given to the role of medical fee schedules in containing the prices of medical services. To this end, we develop a model for estimating the potential cost savings from implementing medical fee schedules. A market basket of medical services received by injured workers is constructed. This basket is used to estimate the parameters of the model. In addition, the basket is used to determine the impact of imposing a fee schedule linked to usual and ...


The Markov Chain Interest Rate Scenario Generator Revisited, Sarah L.M. Christiansen Jan 1994

The Markov Chain Interest Rate Scenario Generator Revisited, Sarah L.M. Christiansen

Journal of Actuarial Practice 1993-2006

This paper furthers the development of the Markov chain interest rate generator. Though the basic technique remains essentially unchanged, there are still many significant changes to the model. For example: (i) the long (key) rates are now are generated by a mean reversionary process; (ii) the number of shapes is increased from seven to 11; (iii) the limitation of changing by only two shape codes per year is removed; and (iv) the random walk matrix that determines the shapes is revised to be more realistic. An algorithm is developed to determine the shape code of the original yield curve, thus ...


"Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver": Author's Reply To Previous The Discussion*, Robert L. Brown Jan 1994

"Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver": Author's Reply To Previous The Discussion*, Robert L. Brown

Journal of Actuarial Practice 1993-2006

No abstract provided.


Safety First And Ambiguity, Lawrence A. Berger, Howard Kunreuther Jan 1994

Safety First And Ambiguity, Lawrence A. Berger, Howard Kunreuther

Journal of Actuarial Practice 1993-2006

There is considerable empirical evidence suggesting that ambiguity (i.e., parameter risk) impacts pricing decisions by actuaries and underwriters and their desire to provide coverage. Stone proposed a safety first model of choice that provides a possible explanation for this behavior. This paper analyzes Stone's proposed stability and survival constraints and compares the results with those predicted by expected utility theory. The analysis is motivated by insurers' increasing reluctance to provide coverage for certain specific risks such as earthquake damage insurance where the probability of loss is ambiguous. We show that such behavior is consistent with safety first but ...


Managing The Costs And Risks Of Housing Finance: A New Role For Actuaries, Anthony Asher Jan 1994

Managing The Costs And Risks Of Housing Finance: A New Role For Actuaries, Anthony Asher

Journal of Actuarial Practice 1993-2006

Housing finance is a nontraditional field where actuarial expertise could be applied fruitfully. The development of mortgage instruments requires the application of financial mathematics, while the evaluation and management of the financial risks to which borrowers and lenders are exposed require a knowledge of insurance principles. This paper splits the financial costs of home ownership into several components: those that arise from inflation, risk, administration, and the residual real interest charge. The risk component further is partitioned into life contingencies, economic contingencies, and various moral hazards. This analysis provides a basis for future financial innovation, highlights where government intervention may ...


Modal Premium Factors In Ordinary Life Insurance, James B. Ross, Criss G. Woodruff Jan 1994

Modal Premium Factors In Ordinary Life Insurance, James B. Ross, Criss G. Woodruff

Journal of Actuarial Practice 1993-2006

For ordinary life policyholders who want to pay more frequently than annually, insurers construct schedules of modal premium factors that reflect additional charges for the costs of collection, forgone interest, and premiums uncollected or refunded in the year of death. Competition within the industry forces convergence of such schedules. On the other hand, if such factors for a given company reflect its own experience (in expense, interest, mortality, and persistency), the differences between companies will force schedules apart. Analysis of a large group of life insurers over the 1972-1982-1992 period shows that modal premium factors are dustered closely, that they ...


Predicting Automobile Insurance Multi-Regional Base Pure Premiums, Edward Nissan, Iskandar S. Hamwi Jan 1994

Predicting Automobile Insurance Multi-Regional Base Pure Premiums, Edward Nissan, Iskandar S. Hamwi

Journal of Actuarial Practice 1993-2006

Multi-regional insurance base premiums are customarily computed by a top-down method where national or state projections are adjusted to reflect regional differences. This paper proposes a methodology for a bottom-up projection. A weighing scheme that minimizes the variance of the estimator is suggested as a criterion to establish an overall multi-regional rate.