Research Data from Catholic University of Korea Update Understanding of Insurance Economics (Life insurance settlement and the monopolistic insurance…

Insurance Weekly News

Research Data from Catholic University of Korea Update Understanding of Insurance Economics (Life insurance settlement and the monopolistic insurance market)

By a News Reporter-Staff News Editor at Insurance Weekly News -- Research findings on Economics - Insurance Economics are discussed in a new report. According to news reporting from Gyeonggi Do, South Korea, by VerticalNews journalists, research stated, "We analyze the effects of life insurance settlement on insurance contract design, the insurer's profit and welfare. Policyholders face not only mortality risks but also heterogeneous liquidity risks which lead the policyholders to surrender or settle the policies."

Funders for this research include Catholic University of Korea, Research Fund, Management Research Institute, Institute of Finance and Banking of Seoul National University.

The news correspondents obtained a quote from the research from the Catholic University of Korea, "It is assumed that the insurer cannot discriminate policyholders based on liquidity risks, and that no cost is incurred in surrender and settlement. We characterize the conditions for the endogenous existence of a settlement market, and find that the settlement market, if it exists, raises insurance premium. The effects of settlement on profit and welfare depend on the market structure. In the monopolistic insurance market, the settlement market lowers the insurer's profit, and consumer welfare increases whenever demand increases and possibly increases even when demand decreases. This finding is in contrast with most of the existing studies reporting that settlement never has a positive effect on welfare."

According to the news reporters, the research concluded: "In the competitive insurance market, welfare always decreases."

For more information on this research see: Life insurance settlement and the monopolistic insurance market. Insurance Mathematics & Economics, 2018;81():36-50. Insurance Mathematics & Economics can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands.

Our news journalists report that additional information may be obtained by contacting J. Hong, Catholic University of Korea, Business Adm, Bucheon Si 14662, Gyeonggi Do, South Korea.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.insmatheco.2017.12.003. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

Keywords for this news article include: Gyeonggi Do, South Korea, Asia, Insurance Economics, Economics, Risk and Prevention, Insurance Companies, Catholic University of Korea.