The scope and ambitions of biomedical institutions worldwide currently working toward the integra... more The scope and ambitions of biomedical institutions worldwide currently working toward the integration of personalized medicine (PM) require recognizing the potential profound impact on regulatory standards and on the economic functioning and financing of healthcare. Against this background, researchers and policymakers must manage the arising challenges for the healthcare systems. In this paper we study the literature related to the consequences of PM on health insurance and care systems. Using the PRISMA research protocol, we search the existing body of literature and analyze publications dealing with insurance (419 papers) in the field of PM. After a detailed reading of the 52 studies included in our analysis, we synthesize challenges in three fields that must be addressed to avoid hindering the implantation of PM. The key issues that we highlight concern (1) a lack of clear and consistent data on the economic relevance of PM, (2) a value-oriented and cost-efficient definition of ...
In compulsory health insurance in Switzerland, policyholders can choose two main features, the le... more In compulsory health insurance in Switzerland, policyholders can choose two main features, the level of deductible and the type of plan. Deductibles can be chosen among six levels, which range from CHF 300 to 2500. While the coverage and benefits are identical, insurers offer several plans where policyholders must first call a medical hotline, consult their family doctor, or visit a doctor from a defined network. The main benefit of higher deductibles and insurance plans with limitations is lower premiums. The insureds’ decisions to opt for a specific cover depend on observed and unobserved characteristics. The aim of this research is to understand the correlation between insurance plan choices and lifestyle through the state of health and medical care consumption in the setting of Swiss mandatory health insurance. To do so, we account for individual health and medical health care consumption as unobserved variables employing structural equation modeling. Our empirical analysis is b...
This article uses cross-sectional data from the Survey of Health, Ageing, and Retirement in Europ... more This article uses cross-sectional data from the Survey of Health, Ageing, and Retirement in Europe (SHARE) database to test the effect of both long-term care (LTC) public benefits and insurance on the receipt of informal care provided by family members living outside the household in Italy and Spain. The choice of Italy and Spain comes from the fact that informal care is rather similar in these two countries while their respective public LTC financing systems are different. Our results support the hypothesis of LTC public support decreasing the receipt of informal care for Spain while reject it for Italy. They tend to confirm that the effect of public benefits on informal care depends on the typology of public coverage for LTC whereby access to proportional benefits negatively influences informal care receipt while access to cash benefits exerts a positive effect. Our results also suggest that private LTC insurance complements the public LTC financing system in place.
In the mandatory health insurance market in Switzerland, a range of insurers offer policies that ... more In the mandatory health insurance market in Switzerland, a range of insurers offer policies that differ in characteristics like premium and service level while benefits are the same and regulated by law. In this paper, we give an overview of the market and analyse the relationship between insurers’ characteristics and the evolution of their market shares. Indeed, in view of substantial differences between the players, the risk that policyholders change their provider is important. We develop a linear model with two-sided lognormally distributed errors and use publicly available data on the Swiss mandatory health insurance market for the years from 2002 to 2015. Thereby we identify and quantify the main drivers for the policyholders’ switching behavior that reflect in changes in market shares. The results suggest that market share changes are particularly linked to the difference between an insurer’s premium and the overall market premium. In addition, the difference to the previous ...
Long-term care (LTC) encompasses a set of services provided to impaired and dependent elderly peo... more Long-term care (LTC) encompasses a set of services provided to impaired and dependent elderly people. To assess the level of the dependence several scales are used, including activities of daily living (ADL), instrumental ADL (IADL) and functional limitations. Once an elderly person fails to perform these activities independently, he or she requires special assistance. Help can be provided as informal care by relatives and as formal care by professionals. The aim of this research is to study individual characteristics that relate to the demand of LTC and to analyze the relation between formal and informal care. We base our study on data from the Swiss Health Survey focusing on respondents aged over 65 years. Using the structural equation modeling technique, we develop a statistical model that considers the dependence concept as a latent variable. This hidden dependence variable combines three indices linked to the limitations in ADL, in IADL and functional limitations. Accounting fo...
Zeitschrift für die gesamte Versicherungswissenschaft
The low interest rates that prevail on many capital markets impose great challenges for the asset... more The low interest rates that prevail on many capital markets impose great challenges for the asset management of financial organizations. They try to achieve target returns for their clients, a solid one-period funding ratio and a low one-period underfunding probability. In this summarizing contribution of , we aim to study the impact of capital allocation strategies for pension funds in Switzerland. Thereby, we compare classic Markowitz theory with an extended Taylor series approach for the utility function. It is further analyzed how the assumption of normally distributed returns drives the optimal asset allocation when compared with using the distributions corresponding to the best fit of the historical data. Taking the extended utility function including the first four central moments and the alternative return distributions, we simulate the assets of a pension fund in a oneperiod model with the Monte Carlo method. A comparison of these results with those obtained from the classic minimum variance theory concludes that a considerable change of the portfolio weights takes place. Our research is relevant for theory and practice alike. Financial institutions can strongly profit from comparing different approaches when assessing their investment strategy. Das niedrige Zinsniveau, das auf vielen Kapitalmärkten vorherrscht, stellt das Assetmanagement von Finanzeinrichtungen vor große Herausforderungen. Ihr Ziel ist es, Zielrenditen für ihre Kunden, einen sicheren Deckungsgrad auf Einjahressicht sowie eine niedrige einjährige Unterdeckungswahrscheinlichkeit sicherzustellen. In dieser Zusammenfassung der Arbeit von Müller und Wagner (2018) werden die Strategien zur Kapitalallokation von Schweizer Pensionskassen untersucht. Dabei vergleichen wir die klassische Markowitz Portfoliotheorie mit dem Ansatz einer erweiterten Taylorreihe für die Nutzenfunktion. Des Weiteren wird die Annahme von normalverteilten Renditen für die optimale Vermögensallokation mit Verteilungen verglichen, welche die historischen Werte besser abbilden. Mit Hilfe einer erweiterten Nutzenfunktion, welche die ersten vier zentralen Momente beinhaltet sowie den alternativen Renditeverteilungen, simulieren wir das Kapital einer Pensionskasse in einem Einperiodenmodell. Die Resultate zeigen, dass eine erhebliche Veränderung der Portfoliogewichte stattfindet. Unsere Ergebnisse sind sowohl für die Theorie als auch für die Praxis relevant. Finanzinstitutionen können stark von einem Vergleich verschiedener Ansätze in der Beurteilung der Anlagestrategie profitieren.
Participating life insurance contracts and pension plans often include a return guarantee and par... more Participating life insurance contracts and pension plans often include a return guarantee and participation in the surplus of the institution's result. The final account value in such contracts depends on the investment policy driven by solvency requirements, as well as on the level of market returns, the guarantee and the participation rates. Using a contingent claim model for such contracts, we assume a competitive market with minimum solvency requirements similar to Solvency II. We consider solvency requirements on maturity and one-year time horizons, as well as contracts with single and periodic premium payments. Through numerical analyses, we link the expected returns for equity holders and policyholders in various situations. Using the return on equity and policyholder internal rate of return along with utility measures, we assess which contract settings optimize the return compromise for both stakeholders in a low-interest-rate environment. Our results extend the academic literature by building on the work by and are relevant for practitioners, given the current financial market environment and difficulties in insurance-linked savings plans with guarantees.
Zeitschrift für die gesamte Versicherungswissenschaft, 2015
Though almost every insurer provides an integrated solution for online product research and purch... more Though almost every insurer provides an integrated solution for online product research and purchase for existing and potentially new customers, there is still a significant percentage of customers turning into research-shoppers, a practice of using one channel for products search and another for purchase. This trend is visible from the channel usage statistics: according to various studies, while more than half of the customers worldwide use the insurers own website for product research, only a minor percentage of them stays there for purchase purposes. The preferred purchase channel often remains the one that enables personal contact to the sales person. This situation is mostly due to the high complexity of the insurance products. In addition, insurance products belong to the category of experience goods, where the evaluation of the product price and characteristics is difficult and can be based only upon previous experience, e.g. after experiencing a claim. While channel switch might lead to higher profit since multichannel customers were found to spend more, the change of the insurer is a serious threat. In this paper we address this issue and analyse the research-shopper phenomenon in the insurance industry. We investigate which customer and policy characteristics influence the research-shopping behaviour in terms of duration from research conduc-
On the "Mean Field" Interpretation of Burgers' equation
Fruitful analogies, partially first established by C. M. Newman,(1) between the variables, functi... more Fruitful analogies, partially first established by C. M. Newman,(1) between the variables, functions, and equations which describe the equilibrium properties of classical ferro- and antiferromagnets in the Mean Field Approximation (MFA) and those which describe the space-time evolution of compressible Burgers' liquids are developed here for one-dimensional systems. It is shown that the natural analogies are: magnetic field and position coordinate; ferro-/antiferromagnetic coupling constants and negative/positive times; free energy per spin and velocity potential; magnetization and velocity field; magnetic susceptibility and mass density. An unexpected consequence of these analogies is a derivation of the Morette-Van Hove relation. Another novelty is that they necessitate the investigation of weak solutions of Burgers' equation for negative times, corresponding to the Curie-Weiss transition in ferromagnets. This is achieved by solving the ldquofinal-valuerdquo problem of th...
The risk of model misspecification and its impact on solvency measurement in the insurance sector
The Journal of Risk Finance, 2012
Purpose–The purpose of this paper is to study the risk of misspecifying solvency models for insur... more Purpose–The purpose of this paper is to study the risk of misspecifying solvency models for insurance companies. Design/methodology/approach–Based on a basic solvency model, the authors examine the sensitivity of different risk measures with respect to model misspecification. An analysis considers the effects of introducing stochastic jumps and linear, as well as non-linear dependencies into the basic setting on the solvency capital requirements, shortfall probability and expected policyholder deficit. Additionally, the ...
The scope and ambitions of biomedical institutions worldwide currently working toward the integra... more The scope and ambitions of biomedical institutions worldwide currently working toward the integration of personalized medicine (PM) require recognizing the potential profound impact on regulatory standards and on the economic functioning and financing of healthcare. Against this background, researchers and policymakers must manage the arising challenges for the healthcare systems. In this paper we study the literature related to the consequences of PM on health insurance and care systems. Using the PRISMA research protocol, we search the existing body of literature and analyze publications dealing with insurance (419 papers) in the field of PM. After a detailed reading of the 52 studies included in our analysis, we synthesize challenges in three fields that must be addressed to avoid hindering the implantation of PM. The key issues that we highlight concern (1) a lack of clear and consistent data on the economic relevance of PM, (2) a value-oriented and cost-efficient definition of ...
In compulsory health insurance in Switzerland, policyholders can choose two main features, the le... more In compulsory health insurance in Switzerland, policyholders can choose two main features, the level of deductible and the type of plan. Deductibles can be chosen among six levels, which range from CHF 300 to 2500. While the coverage and benefits are identical, insurers offer several plans where policyholders must first call a medical hotline, consult their family doctor, or visit a doctor from a defined network. The main benefit of higher deductibles and insurance plans with limitations is lower premiums. The insureds’ decisions to opt for a specific cover depend on observed and unobserved characteristics. The aim of this research is to understand the correlation between insurance plan choices and lifestyle through the state of health and medical care consumption in the setting of Swiss mandatory health insurance. To do so, we account for individual health and medical health care consumption as unobserved variables employing structural equation modeling. Our empirical analysis is b...
This article uses cross-sectional data from the Survey of Health, Ageing, and Retirement in Europ... more This article uses cross-sectional data from the Survey of Health, Ageing, and Retirement in Europe (SHARE) database to test the effect of both long-term care (LTC) public benefits and insurance on the receipt of informal care provided by family members living outside the household in Italy and Spain. The choice of Italy and Spain comes from the fact that informal care is rather similar in these two countries while their respective public LTC financing systems are different. Our results support the hypothesis of LTC public support decreasing the receipt of informal care for Spain while reject it for Italy. They tend to confirm that the effect of public benefits on informal care depends on the typology of public coverage for LTC whereby access to proportional benefits negatively influences informal care receipt while access to cash benefits exerts a positive effect. Our results also suggest that private LTC insurance complements the public LTC financing system in place.
In the mandatory health insurance market in Switzerland, a range of insurers offer policies that ... more In the mandatory health insurance market in Switzerland, a range of insurers offer policies that differ in characteristics like premium and service level while benefits are the same and regulated by law. In this paper, we give an overview of the market and analyse the relationship between insurers’ characteristics and the evolution of their market shares. Indeed, in view of substantial differences between the players, the risk that policyholders change their provider is important. We develop a linear model with two-sided lognormally distributed errors and use publicly available data on the Swiss mandatory health insurance market for the years from 2002 to 2015. Thereby we identify and quantify the main drivers for the policyholders’ switching behavior that reflect in changes in market shares. The results suggest that market share changes are particularly linked to the difference between an insurer’s premium and the overall market premium. In addition, the difference to the previous ...
Long-term care (LTC) encompasses a set of services provided to impaired and dependent elderly peo... more Long-term care (LTC) encompasses a set of services provided to impaired and dependent elderly people. To assess the level of the dependence several scales are used, including activities of daily living (ADL), instrumental ADL (IADL) and functional limitations. Once an elderly person fails to perform these activities independently, he or she requires special assistance. Help can be provided as informal care by relatives and as formal care by professionals. The aim of this research is to study individual characteristics that relate to the demand of LTC and to analyze the relation between formal and informal care. We base our study on data from the Swiss Health Survey focusing on respondents aged over 65 years. Using the structural equation modeling technique, we develop a statistical model that considers the dependence concept as a latent variable. This hidden dependence variable combines three indices linked to the limitations in ADL, in IADL and functional limitations. Accounting fo...
Zeitschrift für die gesamte Versicherungswissenschaft
The low interest rates that prevail on many capital markets impose great challenges for the asset... more The low interest rates that prevail on many capital markets impose great challenges for the asset management of financial organizations. They try to achieve target returns for their clients, a solid one-period funding ratio and a low one-period underfunding probability. In this summarizing contribution of , we aim to study the impact of capital allocation strategies for pension funds in Switzerland. Thereby, we compare classic Markowitz theory with an extended Taylor series approach for the utility function. It is further analyzed how the assumption of normally distributed returns drives the optimal asset allocation when compared with using the distributions corresponding to the best fit of the historical data. Taking the extended utility function including the first four central moments and the alternative return distributions, we simulate the assets of a pension fund in a oneperiod model with the Monte Carlo method. A comparison of these results with those obtained from the classic minimum variance theory concludes that a considerable change of the portfolio weights takes place. Our research is relevant for theory and practice alike. Financial institutions can strongly profit from comparing different approaches when assessing their investment strategy. Das niedrige Zinsniveau, das auf vielen Kapitalmärkten vorherrscht, stellt das Assetmanagement von Finanzeinrichtungen vor große Herausforderungen. Ihr Ziel ist es, Zielrenditen für ihre Kunden, einen sicheren Deckungsgrad auf Einjahressicht sowie eine niedrige einjährige Unterdeckungswahrscheinlichkeit sicherzustellen. In dieser Zusammenfassung der Arbeit von Müller und Wagner (2018) werden die Strategien zur Kapitalallokation von Schweizer Pensionskassen untersucht. Dabei vergleichen wir die klassische Markowitz Portfoliotheorie mit dem Ansatz einer erweiterten Taylorreihe für die Nutzenfunktion. Des Weiteren wird die Annahme von normalverteilten Renditen für die optimale Vermögensallokation mit Verteilungen verglichen, welche die historischen Werte besser abbilden. Mit Hilfe einer erweiterten Nutzenfunktion, welche die ersten vier zentralen Momente beinhaltet sowie den alternativen Renditeverteilungen, simulieren wir das Kapital einer Pensionskasse in einem Einperiodenmodell. Die Resultate zeigen, dass eine erhebliche Veränderung der Portfoliogewichte stattfindet. Unsere Ergebnisse sind sowohl für die Theorie als auch für die Praxis relevant. Finanzinstitutionen können stark von einem Vergleich verschiedener Ansätze in der Beurteilung der Anlagestrategie profitieren.
Participating life insurance contracts and pension plans often include a return guarantee and par... more Participating life insurance contracts and pension plans often include a return guarantee and participation in the surplus of the institution's result. The final account value in such contracts depends on the investment policy driven by solvency requirements, as well as on the level of market returns, the guarantee and the participation rates. Using a contingent claim model for such contracts, we assume a competitive market with minimum solvency requirements similar to Solvency II. We consider solvency requirements on maturity and one-year time horizons, as well as contracts with single and periodic premium payments. Through numerical analyses, we link the expected returns for equity holders and policyholders in various situations. Using the return on equity and policyholder internal rate of return along with utility measures, we assess which contract settings optimize the return compromise for both stakeholders in a low-interest-rate environment. Our results extend the academic literature by building on the work by and are relevant for practitioners, given the current financial market environment and difficulties in insurance-linked savings plans with guarantees.
Zeitschrift für die gesamte Versicherungswissenschaft, 2015
Though almost every insurer provides an integrated solution for online product research and purch... more Though almost every insurer provides an integrated solution for online product research and purchase for existing and potentially new customers, there is still a significant percentage of customers turning into research-shoppers, a practice of using one channel for products search and another for purchase. This trend is visible from the channel usage statistics: according to various studies, while more than half of the customers worldwide use the insurers own website for product research, only a minor percentage of them stays there for purchase purposes. The preferred purchase channel often remains the one that enables personal contact to the sales person. This situation is mostly due to the high complexity of the insurance products. In addition, insurance products belong to the category of experience goods, where the evaluation of the product price and characteristics is difficult and can be based only upon previous experience, e.g. after experiencing a claim. While channel switch might lead to higher profit since multichannel customers were found to spend more, the change of the insurer is a serious threat. In this paper we address this issue and analyse the research-shopper phenomenon in the insurance industry. We investigate which customer and policy characteristics influence the research-shopping behaviour in terms of duration from research conduc-
On the "Mean Field" Interpretation of Burgers' equation
Fruitful analogies, partially first established by C. M. Newman,(1) between the variables, functi... more Fruitful analogies, partially first established by C. M. Newman,(1) between the variables, functions, and equations which describe the equilibrium properties of classical ferro- and antiferromagnets in the Mean Field Approximation (MFA) and those which describe the space-time evolution of compressible Burgers' liquids are developed here for one-dimensional systems. It is shown that the natural analogies are: magnetic field and position coordinate; ferro-/antiferromagnetic coupling constants and negative/positive times; free energy per spin and velocity potential; magnetization and velocity field; magnetic susceptibility and mass density. An unexpected consequence of these analogies is a derivation of the Morette-Van Hove relation. Another novelty is that they necessitate the investigation of weak solutions of Burgers' equation for negative times, corresponding to the Curie-Weiss transition in ferromagnets. This is achieved by solving the ldquofinal-valuerdquo problem of th...
The risk of model misspecification and its impact on solvency measurement in the insurance sector
The Journal of Risk Finance, 2012
Purpose–The purpose of this paper is to study the risk of misspecifying solvency models for insur... more Purpose–The purpose of this paper is to study the risk of misspecifying solvency models for insurance companies. Design/methodology/approach–Based on a basic solvency model, the authors examine the sensitivity of different risk measures with respect to model misspecification. An analysis considers the effects of introducing stochastic jumps and linear, as well as non-linear dependencies into the basic setting on the solvency capital requirements, shortfall probability and expected policyholder deficit. Additionally, the ...
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Papers by Joël Wagner