Insurers : too many, too few, or"just right"? initial observations on a cross-country dataset of concentration and competition measures

In many markets, industry and policymakers agree that there may be too many insurers. In others, the consensus is that there could be benefit from more competition. But this broad consensus is often supported by evidence that is more qualitative, anecdotal, or judgmental despite being unanimous.What is less clear, however, is how far consolidation or liberalization will go, how fast, and when it will end. This paper presents some initial observations from a cross-country data set and proposes that individual country results can be interpreted against this data set to inform expectations regarding trends in competition, concentration and consolidation, to inform analysis of the sector, for individual firm strategic planning and wider market risk assessments. A"natural level"for measures is suggested as a starting hypothesis. Further consideration is then made of the role of absolute market size, stage of market development, and differentials between life and non life segments. Analysis of the natural level, adjusted for market conditions, can then be used to develop preliminary views on current and expected market dynamics, strategic planning, and to inform policy, regulatory and supervisory priorities.Debt Markets,Markets and Market Access,Emerging Markets,Microfinance,Insurance&Risk Mitigation

The market for retirement products in Australia

Australia introduced a mandatory retirement savings scheme in 1992. This built on pre-existing voluntary occupational plans. The new scheme has been very successful in expanding coverage and mobilizing large financial savings that are equal to close to 100 percent of GDP. However, Australia does not impose restrictions on payout options. The payout phase used to be dominated by lump sum withdrawals, which accounted for 80 percent of benefit payments as recently as 2002. But pension payments increased in recent years and now represent 45 percent of total payments. The vast majority of these pension payments take the form of term annuities and allocated annuities. The latter are similar to phased withdrawals in Chile but run for fixed terms of up to 25 years rather than for lifetime terms. The demand for life annuities and lifetime phased withdrawals is very limited. The paper discusses the factors that have shaped the pattern of demand for retirement products, including the availability of the universal age pension and the effect of clawback provisions, the impact of the high level of home ownership, and the widespread preference of retiring workers for reliance on self-annuitization. The paper also reviews the prudential regulation of superannuation funds and life insurance companies.,Debt Markets,Emerging Markets,Pensions&Retirement Systems,Economic Theory&Research

An empirical analysis of the annuity rate in Chile

Empirical analyses of annuities markets have been limited to a few industrial countries and restricted by data limitations. Chile provides excellent conditions for research on annuities because of the depth of its market and the availability of data. The authors use a panel of life insurance company data to examine econometrically the main determinants of the annuity rate, defined as the internal rate ofreturn on annuities. The results indicate that the annuity rate is determined by the risk-free interest rate, the share of privately-issued higher yield securities in the portfolio of providers as a proxy for the spread over the risk-free rate, the leverage of providers, the level of broker's commissions, the market share of individual providers, the level of the premium, and the degree of market competition. The results also show that efforts to improve market transparency produced structural shifts in the parameters of the annuity rate equation. The results are consistent with separate research on money's worth ratios, and indicate the need to develop appropriate financial instruments, allowing providers to hedge their risks while extracting higher returns, and also to ensure competition and transparency in annuities markets, in order to ensure good outcomes for annuitants.Insurance&Risk Mitigation,Pensions&Retirement Systems,Economic Theory&Research,Investment and Investment Climate,Non Bank Financial Institutions

A conceptual framework for retirement products : Risk sharing arrangements between providers and retirees

Voluntary annuity markets are, in most countries, smaller than what the theoretical and part of the empirical literature would suggest. There are both demand and supply constraints that hamper the development of annuity markets. In particular, traditional products available in most countries can require excessive minimum capital requirements for given investment opportunities available to providers. Investment and longevity risk should be shared between providers and annuitants so that supply constraints can be relaxed. Alternative annuity products, which imply risk sharing, could be backed by substantially lower capital investments or, equivalently, provided at substantially lower prices to consumers.Insurance&Risk Mitigation,Environmental Economics&Policies,Pensions&Retirement Systems,Economic Theory&Research,Non Bank Financial Institutions,Insurance&Risk Mitigation,Pensions&Retirement Systems,Economic Theory&Research,Environmental Economics&Policies,Non Bank Financial Institutions

On the measurement of solvency of insurance companies : recent developments that will alter methodsadopted in emerging markets

Solvency-both as an economic requirement in the market and as a regulatory and supervisory tool-is critical to all insurance markets. Current market conditions, coupled with expected institutional changes, will place particular burdens on emerging and developing markets. Institutional solvency, effective risk management within companies, effective supervisory oversight, and the development of market disciplines are all linked. The author proposes that the effective implementation of the emerging regime needs a careful and diligent phased process of capacity-building. The first priorities are identified as a strong supervisor, a basic solvency margin requirement, and the initiation of efforts to gather appropriate data sets. This can be followed by advancing development of more sophisticated solvency regulation, increased use of technical expertise, and increased use of market disciplines as the community and financial markets become more able to exercise such discipline.Insurance Law,Insurance&Risk Mitigation,Payment Systems&Infrastructure,Banks&Banking Reform,Health Economics&Finance,Insurance&Risk Mitigation,Banks&Banking Reform,Insurance Law,Health Economics&Finance,Non Bank Financial Institutions

Do screening tools assess palliative care needs and 12-month mortality in patients admitted to hepatology in-patient wards?

BACKGROUND: Many liver patients have unmet palliative care needs, but liver clinicians are unclear whom to refer to specialist palliative care (SPC). The Supportive and Palliative Care Indicator Tool (SPICT) and the Bristol Prognostic Screening Tool (BPST) could help identify suitable patients, but neither has been tested for this role. This study evaluated their role as screening tools for palliative care needs and for predicting 12-month mortality. METHODS: A case note review of hepatology in-patients, who were not peritransplant and post-transplant status, was conducted in one tertiary unit. Main outcomes were clinical judgement of need for SPC referral, BPST scores, SPICT attribution of caseness and 12-month survival status. Discriminatory ability of tools was assessed using sensitivity, specificity, positive predictive value (PPV), negative predictive value (NPV) and area under the receiver operating characteristic (AUROC) curve. RESULTS: 117 medical notes were reviewed for survival analysis, 47 of which were additionally assessed for suitability for SPC referral, using clinical judgement. SPICT (sensitivity=93%; PPV=93%; AUROC=0.933) and BPST (sensitivity=59%, PPV=79%, AUROC=0.693) demonstrated excellent and good performance, respectively, in predicting patients’ need for SPC referral. SPICT and BPST only had moderate ability at predicting death at 12 months (PPV: 54% and 56%, respectively). CONCLUSION: SPICT and BPST show potential as screening tools for identifying patients for referral to SPC. Further work is needed to determine how to implement these tools in a clinical setting

Assessing Big-Bang Nucleosynthesis

Systematic uncertainties in the light-element abundances and their evolution make a rigorous statistical assessment difficult. However, using Bayesian methods we show that the following statement is robust: the predicted and measured abundances are consistent with 95\% credibility only if the baryon-to-photon ratio is between $2\times 10^{-10}$ and $6.5\times 10^{-10}$ and the number of light neutrino species is less than 3.9. Our analysis suggests that the $^4$He abundance may have been systematically underestimated.Comment: 7 pages, LaTeX(2.09), 6 postscript figures (attached). A postscript version with figures can be found at ftp://astro.uchicago.edu/pub/astro/copi/assessing_BBN . (See the README file for details