Title :

Theoretical Foundations of Community Rating by a Private Monopolist Insurer: Framework, Regulation, and Numerical Analysis

Author(s) :

Braouezec, Yann [Auteur]
Lille économie management - UMR 9221 [LEM]
IÉSEG School Of Management [Puteaux]
Cagnol, John [Auteur]
Université Paris-Saclay
Fédération de Mathématiques de CentraleSupélec
CentraleSupélec

Publication date :

2023

English keyword(s) :

Insurance
community rating
adverse selection
optimal contract
social welfare

HAL domain(s) :

Mathématiques [math]
Sciences de l'Homme et Société/Economies et finances

English abstract : [en]

Community rating is a policy that mandates uniform premium regardless of the risk factors. In this paper, our focus narrows to the single contract interpretation wherein we establish a theoretical framework for community ...
Show more >Community rating is a policy that mandates uniform premium regardless of the risk factors. In this paper, our focus narrows to the single contract interpretation wherein we establish a theoretical framework for community rating using Stiglitz's (1977) monopoly model in which there is a continuum of agents. We exhibit profitability conditions and show that, under mild regularity conditions, the optimal premium is unique and satisfies the inverse elasticity rule. Our numerical analysis, using realistic parameter values, reveals that under regulation, a 10% increase in indemnity is possible with minimal impact on other variables.Show less >

Language :

Anglais

Collections :

• Lille Économie Management (LEM) - UMR 9221

Source :

Harvested from HAL