The efficiency effects of life settlement on the life insurance market

Seog, S. Hun; Hong, Jimin

doi:10.1016/j.pacfin.2019.06.012

Cited by 5 publications

(9 citation statements)

References 19 publications

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“…As a result, we show that policyholders with higher liquidity risk than target liquidity risk purchase life insurance, whereas Seog and Hong (2019) state that policyholders with low liquidity risk than target liquidity risk purchase life insurance. Who purchases insurance is an empirical question.…”

Section: Introductionmentioning

confidence: 76%

“…Both costs decrease consumer welfare while affecting the insurance market through different mechanisms. This assumption is similar to that of Seog and Hong (2019). However, this study differs from the study of Seog and Hong (2019) in two ways.…”

Section: Introductionmentioning

confidence: 79%

“…Hong and Seog (2018) consider a heterogeneous liquidity risk of policyholders, and thus, the introduction of life settlement may increase the benefit of the consumer. On the other hand, Seog and Hong (2019) consider the liquidity risks of both the insurer and policyholder. They consider the liquidity costs of both the insurer and policyholder.…”

Section: Introductionmentioning

confidence: 99%

“…First, Seog and Hong (2019) set the model in which policyholders choose to surrender for cash needs even when the benefit from surrender is less than that from keeping insurance in the long term perspective, whereas we set the model in which the policyholders choose to surrender with liquidity risk since the utility from surrender is greater than that from keeping insurance. Note that Seog and Hong (2019) assume that policyholders face a kind of liquidity constraint.…”

Section: Introductionmentioning

confidence: 99%

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The effect of life insurance settlement on insurance market and consumer welfare

Hong

2020

CSAM

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This study investigates the effect of life settlement on the monopolistic insurance market. In particular, we consider liquidity cost, which is the cost incurred to the insurer to meet the request of surrender, and trading cost, which is the transaction cost of the policyholders for the settlement. We first show that the introduction of a life settlement can increase insurance demand and enhance consumer welfare even when the trading cost is higher than the liquidity cost. That is, even if the settlement market is less efficient than the insurance market, both insurance demand and consumer welfare can be increased. Second, the insurer's profit can also be increased when settlement is introduced because not only can the insurer save the liquidity cost but also the demand of insurance increases. Lastly, insurance demand does not always decrease when both costs increase. Depending on the population distribution over the liquidity risk, the demand of insurance can be increased or decreased.

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Section: Introductionmentioning

confidence: 76%

Section: Introductionmentioning

confidence: 79%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The effect of life insurance settlement on insurance market and consumer welfare

Hong

2020

CSAM

Self Cite

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“…In theoretical approaches to the practical regulation of the insurance market the researchers have opposite opinions where, on the one hand, they adduce arguments for active involvement of the state into business operations of private-sector organizations [17], and on the other hand, they substantiate the position that change of the average qualitative level of insurance services is possible only in case of a competitive market [18], and this provides facilities to distinguish the role of specifics of the corporate strategies in assessment of the insurance business efficiency and helps to study the typical behavioral models of management.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Влияние Поведенческой Стратегии На Финансовую Устойчивость Российских Страховщиков

Цветкова¹

2019

КФ

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When moving towards business goals, the insurance company is forced to consider the diverse interests of various stakeholders, who resemble a some kind of informal coalition. The stakeholder relationships may vary and be other than cooperative, with conflicting interests, and even competitive. However, all parties with an interest should be considered as a single whole, the contradictory components of which define the development path of an organization.Based on the stakeholder theory and the resource-based concept of competitiveness, this article analyzes the optimal communication behavior of insurance provider in the Russian market to build an equivalent system for the exchange of resources with their stakeholders depending on the significance of these acquirable resources. The subject of the study is a way towards accessible resources, one that implies the setting of an adequate exchange price for the most significant resources (in the insurance market, these are the insurance premiums).The study touched upon the cultural impact on the insurance business in Russia and revealed the focus of top management during the periods of growth and decline in the market. Insurance companies can use the present findings as a framework in strategic risk management regardless of theier business scale and territorial affiliation. The article demonstrates that a non-equivalent insurer-stakeholder exchange problem can be solved by establishing a strategic state program for the insurance industry development with foundations laid not only for compulsory insurance but also for the statutory regulation of non-compulsory insurance.As part the study, impacts on the relationship system present in the insurance business were identified. The results served an input into a resource exchange model, and statistical data on the Russian insurance market situation were compared graphically. The nature of cause-and-effect relationships between macro factors and financially stable companies was defined.

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Assessing the impact of climate policies on equity risk under sustainable insurance: Cap-and-trade regulation, energy-saving technology subsidies, and carbon tariffs

Lu,

Li,

Lin

et al. 2024

Energy Economics

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The efficiency effects of life settlement on the life insurance market

Cited by 5 publications

References 19 publications

The effect of life insurance settlement on insurance market and consumer welfare

The effect of life insurance settlement on insurance market and consumer welfare

Влияние Поведенческой Стратегии На Финансовую Устойчивость Российских Страховщиков

Assessing the impact of climate policies on equity risk under sustainable insurance: Cap-and-trade regulation, energy-saving technology subsidies, and carbon tariffs

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