We analyse the effect of abolishing gender-based categorisation of risks on the pricing of annuity contracts. Under the absence of screening activities, we find clear evidence of insurers expecting strong adverse selection effects. In particular, most of the unisex contracts’ payouts closely resemble those from women’s policies before the reform. Hence the policy target is not met and there are large efficiency losses for men. We conclude that there seems to be little hope for unisex policies to meet their equity ob jectives if consumers can react on the extensive margin, unless subsidies are extremely large.
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Paper provided by Mannheim Research Institute for the Economics of Aging, University of Mannheim in its series MEA discussion paper series with number
06108.
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