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Guaranteed Renewability with Group Insurance

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  • Pauly, Mark
  • Nickel, Andreas
  • Kunreuther, Howard

Abstract

This paper investigates a multiple-period level premium insurance policy equilibrium in a model in which loss probabilities increase for a fixed time period for a set of persons buying insurance in a group. We show that a level-premium sequence which induces risk averse persons to become and remain members of the group exists. We also show that the availability of the Medicare program can prevent the emergence of optimal level-premium private group insurance, but that a system of bonuses for remaining in the group can permit optimality to be retained. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Pauly, Mark & Nickel, Andreas & Kunreuther, Howard, 1998. "Guaranteed Renewability with Group Insurance," Journal of Risk and Uncertainty, Springer, vol. 16(3), pages 211-221, July-Aug..
    • Handle: RePEc:kap:jrisku:v:16:y:1998:i:3:p:211-21
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    Citations

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    Cited by:

    1. Renaud Bourlès, 2017. "Prevention incentives in long‐term insurance contracts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 661-674, September.
    2. Michael Hoy & Michael Ruse, 2005. "Regulating Genetic Information in Insurance Markets," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(2), pages 211-237, September.
    3. Beck, Konstantin & Trottmann, Maria & Zweifel, Peter, 2010. "Risk adjustment in health insurance and its long-term effectiveness," Journal of Health Economics, Elsevier, vol. 29(4), pages 489-498, July.
    4. Salam Abdus, 2010. "A Game‐Theoretical Interpretation of Guaranteed Renewability in Health Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 13(2), pages 195-206, September.

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