Mandatory Unisex Policies and Annuity Pricing: Quasi-Experimental Evidence from Germany

Abstract

We analyse the effect of abolishing gender-based categorisation of risks on the pricing of annuity contracts. Under the absence of screening activities, we find clear evidence of insurers expecting strong adverse selection effects. In particular, most of the unisex contracts' payouts closely resemble those from women's policies before the reform. Hence the policy target is not met and there are large efficiency losses for men. We conclude that there seems to be little hope for unisex policies to meet their equity objectives if consumers can react on the extensive margin, unless subsidies are extremely large.

Subjective Life Expectancy and Private Pensions

“…V. Gaudecker and Weber (2006) predict a large efficiency loss for men based on this policy; they find that this reform lowered payouts for men by about 7 percent while changing almost nothing for women.…”

“…3 2 For more information see, e.g., v. Gaudecker and Weber (2006), Coppola and Reil-Held (2009), Coppola and Gasche (2011), Börsch-Supan and Gasche (2010a), Pfarr and Schneider (2011).…”