When information on longevity (survival functions) is unknown early in life, individuals have an interest to insure themselves against future "risk-class" classification. Accordingly, the First-Best typically involves transfers across states of nature. Competitive equilibrium cannot provide such...

In a perfectly competitive market for annuities with full information, the price of annuities is equal to individuals (discounted) survival probabilities. That is, prices are actuarially fair. In contrast, the pricing implicit in social security systems invariably allows for cross subsidization...

People often fail to insure against catastrophes, even when insurance is subsidized. Even when insuring homes, many homeowners still underinsure the full value of their assets. Some researchers have suggested using long-term insurance contracts to reduce these insurance gaps. We examine...

We study the demand for actuarially fair Long Term Care (LTC hereafter) insurance in a setting where autonomous agents only care for daily life consumption while dependent agents also care for LTC expenditures. We assume that dependency decreases the marginal utility of daily life consumption....

Many competitive health insurance markets adjust payments to participating health plans according to their enrollees' risk - including based on diagnostic information. We investigate responses of German health plans to the introduction of morbidity-based risk adjustment in the Statutory Health...

The high and increasing cost of natural disasters around the world motivates a growing body of literature on the role of natural disaster insurance in adapting to climate change. This chapter reviews current challenges in both public and private natural disaster insurance markets in the United...

The fluctuations in incomes inherent in rural communities can be attenuated by reciprocal insurance. We develop a model of such insurance based on self-interested behaviour and voluntary participation. One individual assists another only if the costs of so doing are outweighed by the benefits...

The potentially adverse effects of droughts on agricultural output are obvious. Indonesian rice farmers have no financial protection from climate risk via catastrophic weather risk transfer tools. Done well, a weather index insurance (WII) program can not only provide resources that enable...

This study examines the effect of smallholder farmers' access to a formal climate risk transfer mechanism on their risk preferences. Survey and experimental data were collected from smallholder farmers that have access to weather index-based crop insurance (WICI) in Ethiopia. We use an...

We provide novel evidence of how an innovative market-based solution using remote-sensing technology can mitigate conflict. Droughts are a major driver of conflict in Africa, particularly between nomadic pastoralists and sedentary farmers, and climate change is predicted to intensify this...