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Quantification of the Impact of a Ban on the Use of Gender in Life Insurance

Author

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  • Ondrej Poul

    (University of Economics, Prague)

Abstract

The paper explains the impact of insurance regulation to the pricing after ban of using sex life tables. On 1st March 2011, the Court of Justice decided that it is not possible for pricing to use lifetables based on sex differentiation. There would be a contradiction with the Directive 2004/113/ES that sets a principle of equal treatment between men and women in the access to and supply of goods and services. This conclusion forced the insurers all over the Europe to create new prices and made an information asymmetry in favour of the clients. According to the theory, the market participants’ behaviour in imperfect information leads to a creation of a new market equilibrium. In practice, it results into the product designs adjustments. The impact of regulation into the fi nal price of insurance is quantified on the case of European insurers group. The other impact is the change in the structure of the insurance class in terms of representation of men and women in the new business.

Suggested Citation

  • Ondrej Poul, 2020. "Quantification of the Impact of a Ban on the Use of Gender in Life Insurance," ACTA VSFS, University of Finance and Administration, vol. 14(1), pages 51-67.
    • Handle: RePEc:prf:journl:v:14:y:2020:i:1:p:51-67
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    File URL: https://www.vsfs.cz/periodika/acta-2020-1-04.pdf
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    References listed on IDEAS

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    1. Michael Hoy, 2005. "Risk Classification and Social Welfare," Working Papers 0508, University of Guelph, Department of Economics and Finance.
    2. Thomas Buchmueller & John Dinardo, 2002. "Did Community Rating Induce an Adverse Selection Death Spiral? Evidence from New York, Pennsylvania, and Connecticut," American Economic Review, American Economic Association, vol. 92(1), pages 280-294, March.
    3. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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