What Transaction Costs are Acceptable in Life Insurance Products from the Policyholders' Viewpoint?

Purpose - The purpose of this paper is to analyze what transaction costs are acceptable for customers in different investments. In this study, two life insurance contracts, a mutual fund and a risk-free investment, as alternative investment forms are considered. The first two products under scrutiny are a life insurance investment with a point-to-point capital guarantee and a participating contract with an annual interest rate guarantee and participation in the insurer's surplus. The policyholder assesses the various investment opportunities using different utility measures. For selected types of risk profiles, the utility position and the investor's preference for the various investments are assessed. Based on this analysis, the authors study which cost levels can make all of the products equally rewarding for the investor. Design/methodology/approach - The paper notes the risk-neutral valuation calibration using empirical data utility and performance measurement dynamics underlying: geometric Brownian motion numerical examples via Monte Carlo simulation. Findings - In the first step, the financial performance of the various saving opportunities under different assumptions of the investor's utility measurement is studied. In the second step, the authors calculate the level of transaction costs that are allowed in the various products to make all of the investment opportunities equally rewarding from the investor's point of view. A comparison of these results with transaction costs that are common in the market shows that insurance companies must be careful with respect to the level of transaction costs that they pass on to their customers to provide attractive payoff distributions. Originality/value - To the best of the authors' knowledge, their research question - i.e. which transaction costs for life insurance products would be acceptable from the customer's point of view - has not been studied in the above described context so far

Empirical Findings on Motor Insurance Pricing in Germany, Austria, and Switzerland

This paper focuses on recent developments in motor insurance pricing in Germany, Austria and Switzerland. Through the analysis of responses to a recent comprehensive survey of industry representatives, we examine the various premium components and the processes involved in premium adaptation. New findings on the use of different tariff criteria, on the tools used for market-based and customer-specific pricing, and on the information considered for customer valuation are reported. We also address the integration of the insurance sales staff in the pricing process. With regard to premium adjustments and the introduction of new tariffs, we examine the frequency, time required and costs incurred. With this paper, we contribute to a strand of literature where little academic research has been done so far. In addition, our results entail managerial implications for improving industry practices in insurance pricing

The Impact of Auditing Strategies on Insurers' Profitability

Purpose - The purpose of this paper is to study effective measures in dealing with the phenomenon of insurance claims' fraud. In fact, fraud is one of the major industry concerns. It occurs in all classes of insurance and accounts for a substantial portion of indemnity payments each year. Design/methodology/approach - This paper develops a model framework based on a costly state verification setting in which - while policyholders observe the amount of loss privately - the insurance company can decide to audit incoming claims at some cost. The aim is to derive optimal auditing strategies from the insurance company's perspective while maintaining contract attractiveness to policyholders willing to adhere to the insurance relationship. The possibility for each stakeholder to adapt its behavioral strategy over the course of several periods is taken into account. Using a numerical approach based on Monte Carlo simulations, the impact of different parameterizations on the optimal auditing range by means of a sensitivity analysis is illustrated and analyzed. Findings - The central outcome of the model is an auditing range which selects those claims which should be subject to verification. Practical implications - This paper comes to the conclusion that, given some constant cost per audit, it is optimal to verify the accuracy of claims from the mid-value segment. Furthermore, it can be shown that while the option to adapt one's strategy might be favorable from the insurance company perspective, it has a negative impact on the policyholders' position. This disproves the common belief that adapting the defrauding strategy with the help of signals from service providers would be advantageous. Originality/value - This paper extends the stand of literature on costly state verification and gives indications for optimal auditing strategies in industry practice

Chemical and molecular basis of the carcinogenicity of Aristolochia plants

The herbal drug aristolochic acid (AA), which is derived from the Aristolochia species, has been associated with the development of a novel nephropathy, designated as aristolochic acid nephropathy (AAN), and with human urothelial cancer. The major components of the plant extract AA are nitrophenanthrene carboxylic acids, which, after metabolic activation, are genotoxic mutagens. The major activation pathway of AA involves reduction of the nitro group, primarily catalyzed by NAD(P) H: quinone oxidoreductase (NQO1), to an electrophilic cyclic N-acylnitrenium ion that reacts preferentially with purine bases to form covalent DNA adducts. These specific AA-DNA adducts have been identified and detected in experimental animals exposed to AA or botanical products containing AA, and in urothelial tissues from AAN patients. In rodent tumors induced by AA the predominantly formed DNA adduct 7-(deoxyadenosin-N-6-yl) aristolactam I has been associated with the activation of ras oncogenes through the characteristic transversion mutation AT -> TA. This mutation has been identified in the p53 gene of urothelial tumors of a patient with AAN (induced by use of a herbal product) and in several patients suffering from Balkan endemic nephropathy (BEN) with specific AA-DNA adducts. This is a rare example of a human cancer causally linked to a distinct environmental exposure (ie, use of a herbal product), where the carcinogenic process of initiation is well established, linking formation of carcinogen-specific exposure (specific DNA adduct formation) with the presence of characteristic human tumor mutations

Metabolic activation of carcinogenic aristolochic acid, a risk factor for Balkan endemic nephropathy

Aristolochic acid (AA), a naturally occurring nephrotoxin and carcinogen, is associated with tumor development in patients suffering from Chinese herbs nephropathy (now termed aristolochic acid nephropathy, AAN) and may also be a cause for the development of a similar type of nephropathy, the Balkan endemic nephropathy (BEN). Major DNA adducts [7-(deoxyadenosin-N-6-yl)-aristolactam and 7-(deoxyguanosin-N-2-yl)aristolactam] formed from AA after reductive metabolic activation were found in renal tissues of patients with both diseases. Understanding which human enzymes are involved in AA activation and/or detoxication is important in the assessment of an individual's susceptibility to this plant carcinogen. This paper reviews major hepatic and renal enzymes responsible for AA-DNA adduct formation in humans. Phase I biotransformation enzymes play a crucial role in the metabolic activation of AA to species forming DNA adducts, while a role of phase II enzymes in this process is questionable. Most of the activation of AA in human hepatic microsomes is mediated by cytochrome P450 (CYP) 1A2 and, to a lower extent, by CYP1A1; NADPH:CYP reductase plays a minor role. In human renal microsomes NADPH:CYP reductase is more effective in AA activation. Prostaglandin H synthase (cyclooxygenase, COX) is another enzyme activating AA in human renal microsomes. Among the cytosolic reductases, NAD(P)H:quinone oxidoreductase (NQO I) is the most efficient in the activation of AA in human liver and kidney. Studies with purified enzymes confirmed the importance of CYPs, NADPH:CYP reductase, COX and NQO1 in the AA activation. The orientation of AA in the active sites of human CYP1A1, -1A2 and NQO1 was predicted from molecular modeling and explains the strong reductive potential of these enzymes for AA detected experimentally. We hypothesized that inter-individual variations in expressions and activities of enzymes activating AA may be one of the causes responsible for the different susceptibilities to this carcinogen reflected in the development of AA-induced nephropathies and associated urothelial cancer. (c) 2007 Elsevier B.V. All rights reserved

The genotoxic air pollutant 3-nitrobenzanthrone and its reactive metabolite N-hydroxy-3-aminobenzanthrone lack initiating and complete carcinogenic activity in NMRI mouse skin

3-Nitrobenzanthrone (3-NBA), a genotoxic mutagen found in diesel exhaust and ambient air pollution and its active metabolite N-hydroxy-3-aminobenzanthrone (N-OH-3-ABA) were tested for initiating and complete carcinogenic activity in the NMRI mouse skin carcinogenesis model. Both compounds were found to be inactive as either tumour initiators or complete carcinogens in mouse skin over a dose range of 25-400 nmol. Topical application of 3-NBA and N-OH-3-ABA produced DNA adduct patterns in epidermis, detected by P-32-postlabelling, similar to those found previously in other organs of rats and mice. 24 h after a single treatment of 100 nmol DNA adduct levels produced by 3-NBA (18 +/- 4 adducts/10(8) nucleotides) were 6 times lower than those by 7,12-dimethylbenz[a]anthracene (DMBA; 114 +/- 37 adducts/10(8) nucleotides). In contrast, identical treatment with N-OH-3-ABA resulted in adduct levels in the same range as with DMBA (136 +/- 25 adducts/10(8) nucleotides), indicating that initial DNA adduct levels do not parallel tumour initiating activity. When compounds were tested for tumour initiating activity by a single treatment followed by twice-weekly applications of TPA. DNA adducts formed by DMBA, but not by 3-NBA or N-OH-3-ABA, were still detectable 40 weeks after treatment. When tested for activity as complete carcinogens by twice-weekly topical application, 3-NBA and N-OH-3-ABA produced identical DNA adduct profiles in mouse skin, with adducts still detectable after 40 weeks. Only 3-NBA produced detectable adducts in other organs. (C) 2009 Elsevier Ireland Ltd. All rights reserved

Possible Market Implications of Unisex Insurance Pricing

The main reason for different insurance premiums and benefits is the use of different statistically proven risk factors in actuarial calculations for individuals. Basing its ruling on European Union Directive 2004/113/EC (the Gender Directive), the European Court of Justice on 1 March 2011 concluded that any gender-based discrimination is prohibited, so gender equality in the European Union (EU) must be ensured from 21 December 2012. The ruling definitively banning the use of the gender criterion in actuarial calculations for individual prices may have important consequences for the insurance industry and customers in the EU. In this short text, a number of implications are discussed. Possible consumer behaviour and potential responses from market players are outlined as well as possible further regulatory interventions. The implications of the definitive ban on gender based discrimination are extensive for the insurance industry and may have a strong economic and legal impact on the individual product offering and pricing. https://www.genevaassociation.org/media/887422/ga2014-ie70-schmeiser.pd

Induction of biotransformation enzymes by the carcinogenic air-pollutant 3-nitrobenzanthrone in liver, kidney and lung, after intra-tracheal instillation in rats

3-Nitrobenzanthrone (3-NBA), a carcinogenic air pollutant, was investigated for its ability to induce cytochrome P450 (CYP) 1A1/2 and NAD(P)H:quinone oxidoreductase (NQO1) in liver, kidney and lung of rats treated by intra-tracheal instillation. The organs used were from a previous study performed to determine the persistence of 3-NBA-derived DNA adducts in target and non-target tissues (Bieler et al., Carcinogenesis 28 (2007) 1117-1121, [22]). NQO1 is the enzyme reducing 3-NBA to N-hydroxy-3-aminobenzanthrone (N-OH-3-ABA) and CYP1A enzymes oxidize a human metabolite of 3-NBA, 3-aminobenzanthrone (3-ABA), to yield the same reactive intermediate. 3-NBA and 3-ABA are both activated to species forming DNA adducts by cytosols and/or microsomes isolated from rat lung, the target organ for 3-NBA carcinogenicity, and from liver and kidney. Each compound generated the same five DNA adducts detectable by P-32-postlabelling. When hepatic cytosols from rats treated with 0.2 or 2 mg/kg body weight of 3-NBA were incubated with 3-NBA, DNA adduct formation was 3.2- and 8.6-fold higher, respectively, than in incubations with cytosols from control animals. Likewise, cytosols isolated from lungs and kidneys of rats exposed to 3-NBA more efficiently activated 3-NBA than those of control rats. This increase corresponded to an increase in protein levels and enzymatic activities of NQO1. Incubations of hepatic, pulmonary or renal microsomes of 3-NBA-treated rats with 3-ABA led to an 9.6-fold increase in DNA-adduct formation relative to controls. The highest induction in DNA-adduct levels was found in lung. The stimulation of DNA-adduct formation correlated with expression of CYP1A1/2 induced by the intra-tracheal instillation of 3-NBA. The results demonstrate that 3-NBA induces NQO1 and CYP1A1/2 in livers, lungs and kidneys of rats after intra-tracheal instillation, thereby enhancing its own genotoxic and carcinogenic potential. (c) 2010 Elsevier B.V. All rights reserved