Theoretical Foundations of Community Rating by a Private Monopolist Insurer: Framework, Regulation, and Numerical Analysis
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4 janvier 2024
- handle: 10670/1.amr8ti
- hal: hal-04373063
- ARXIV: 2309.15269
- doi: 10.48550/arXiv.2309.15269
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info:eu-repo/semantics/altIdentifier/arxiv/2309.15269
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info:eu-repo/semantics/altIdentifier/doi/10.48550/arXiv.2309.15269
info:eu-repo/semantics/OpenAccess
Mots-clés
Insurance community rating adverse selection optimal contract social welfare 46N10, 91B05, 91B42 D - Microeconomics/D.D0 - General/D.D0.D04 - Microeconomic Policy: Formulation, Implementation, and Evaluation D - Microeconomics/D.D4 - Market Structure, Pricing, and Design/D.D4.D42 - Monopoly D - Microeconomics/D.D6 - Welfare Economics/D.D6.D60 - General D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: TheorySujets proches
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Yann Braouezec et al., « Theoretical Foundations of Community Rating by a Private Monopolist Insurer: Framework, Regulation, and Numerical Analysis », HAL-SHS : économie et finance, ID : 10.48550/arXiv.2309.15269
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Résumé
Community rating is a policy that mandates uniform premium regardless of the risk factors. In this paper, our focus narrows to the single contract interpretation wherein we establish a theoretical framework for community rating using Stiglitz's (1977) monopoly model in which there is a continuum of agents. We exhibit profitability conditions and show that, under mild regularity conditions, the optimal premium is unique and satisfies the inverse elasticity rule. Our numerical analysis, using realistic parameter values, reveals that under regulation, a 10% increase in indemnity is possible with minimal impact on other variables.