Assurabilité et développement de l'assurance dépendance

The private long-term care insurance (LTCI) market is a puzzle, in France and in several developed countries (United-States, Spain, etc. . . ). The long-term care insurance market is small, yet long-term care is one of the largest uninsured financial risks facing the elderly. In addition public insurance is small in most countries. This research develops a new analysis of this long-term care insurance puzzle. It examines, on the basis of a new data set for France, whether the limited size of the insurance market is explained by market failures, or whether this sub optimal result is linked to institutional reasons ? The research leads to four results. In the first part, I argue that it is possible to push back the insurability frontier for long-term care at home. In the second part, I illustrate how individual preferences may lead some persons not to seek insure, and this for at least two reasons : an incomplete insurance contract ; current and expected health condition has a strong e§ect on wealth utility. On the basis of my data set, I argue that long-term care insurance can become a mass product particularly appreciated by middle classes. In the last part, I show, using standard tests, that there is no adverse selection on the private long-term care insurance market. This could be explained by offsetting effects. In view of these four results, I argue that the current limited size of LTCI market can be better explained by institutional reasons (social insurance criteria, tax disincentives) rather than by market failure. There are no economic obstacles to the development of this market. Nevertheless, a small share of the population will prefer not to insure.