Why Changes in PBGC and FDIC Premiums Should Not Fully Reflect Changes in Underlying Risk (With Some Application to Long-Term Private Insurance Contracts)

IF 16.4 1区 化学 Q1 CHEMISTRY, MULTIDISCIPLINARY Accounts of Chemical Research Pub Date : 2022-09-30 DOI:10.1080/10920277.2022.2123362
David McCarthy
{"title":"Why Changes in PBGC and FDIC Premiums Should Not Fully Reflect Changes in Underlying Risk (With Some Application to Long-Term Private Insurance Contracts)","authors":"David McCarthy","doi":"10.1080/10920277.2022.2123362","DOIUrl":null,"url":null,"abstract":"The degree of risk adjustment in both FDIC and PBGC premiums appears to be much smaller than actuarially fair. We explore why this is using a stylized theoretical model of multiperiod insurance contracts in the presence of moral hazard where the risk status of insureds changes over the life of the contract. If insureds value stable premiums and there is moral hazard, we show that the optimal multiperiod insurance contract for full insurance allocates greater premiums to higher risk states, and lower premiums to lower risk states, but the optimal allocation of premiums across risk states will usually not be actuarially fair. The degree of risk adjustment rises with the extent of moral hazard and falls as risk aversion rises. We extend our analysis to examine optimal risk classification in private insurance in the presence of moral hazard, with similar results. We also discuss practical considerations that further reduce the desirability and feasibility of actuarially fair risk adjustments in premiums for the FDIC and PBGC, and show how our model extends prior work on social insurance with moral hazard.","PeriodicalId":1,"journal":{"name":"Accounts of Chemical Research","volume":null,"pages":null},"PeriodicalIF":16.4000,"publicationDate":"2022-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounts of Chemical Research","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/10920277.2022.2123362","RegionNum":1,"RegionCategory":"化学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 0

Abstract

The degree of risk adjustment in both FDIC and PBGC premiums appears to be much smaller than actuarially fair. We explore why this is using a stylized theoretical model of multiperiod insurance contracts in the presence of moral hazard where the risk status of insureds changes over the life of the contract. If insureds value stable premiums and there is moral hazard, we show that the optimal multiperiod insurance contract for full insurance allocates greater premiums to higher risk states, and lower premiums to lower risk states, but the optimal allocation of premiums across risk states will usually not be actuarially fair. The degree of risk adjustment rises with the extent of moral hazard and falls as risk aversion rises. We extend our analysis to examine optimal risk classification in private insurance in the presence of moral hazard, with similar results. We also discuss practical considerations that further reduce the desirability and feasibility of actuarially fair risk adjustments in premiums for the FDIC and PBGC, and show how our model extends prior work on social insurance with moral hazard.
查看原文
分享 分享
微信好友 朋友圈 QQ好友 复制链接
本刊更多论文
为什么PBGC和FDIC保费的变化不应完全反映潜在风险的变化(适用于长期私人保险合同)
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 去求助
来源期刊
Accounts of Chemical Research
Accounts of Chemical Research 化学-化学综合
CiteScore
31.40
自引率
1.10%
发文量
312
审稿时长
2 months
期刊介绍: Accounts of Chemical Research presents short, concise and critical articles offering easy-to-read overviews of basic research and applications in all areas of chemistry and biochemistry. These short reviews focus on research from the author’s own laboratory and are designed to teach the reader about a research project. In addition, Accounts of Chemical Research publishes commentaries that give an informed opinion on a current research problem. Special Issues online are devoted to a single topic of unusual activity and significance. Accounts of Chemical Research replaces the traditional article abstract with an article "Conspectus." These entries synopsize the research affording the reader a closer look at the content and significance of an article. Through this provision of a more detailed description of the article contents, the Conspectus enhances the article's discoverability by search engines and the exposure for the research.
期刊最新文献
Intentions to move abroad among medical students: a cross-sectional study to investigate determinants and opinions. Analysis of Medical Rehabilitation Needs of 2023 Kahramanmaraş Earthquake Victims: Adıyaman Example. Efficacy of whole body vibration on fascicle length and joint angle in children with hemiplegic cerebral palsy. The change process questionnaire (CPQ): A psychometric validation. Prevalence and predictors of hand hygiene compliance in clinical, surgical and intensive care unit wards: results of a second cross-sectional study at the Umberto I teaching hospital of Rome.
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
现在去查看 取消
×
提示
确定
0
微信
客服QQ
Book学术公众号 扫码关注我们
反馈
×
意见反馈
请填写您的意见或建议
请填写您的手机或邮箱
已复制链接
已复制链接
快去分享给好友吧!
我知道了
×
扫码分享
扫码分享
Book学术官方微信
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术
文献互助 智能选刊 最新文献 互助须知 联系我们:info@booksci.cn
Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。
Copyright © 2023 Book学术 All rights reserved.
ghs 京公网安备 11010802042870号 京ICP备2023020795号-1