The Effect of Firm Traits on Long-Term Care Insurance Pricing

Financing long-term care is an issue of concern to many Americans, yet private long-term care insurance product sales have experienced slow growth. Pricing problems may in part explain this phenomenon. This study provides the first empirical evidence on pricing in the long-term care insurance market...

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Bibliographic Details
Published inThe Journal of risk and insurance Vol. 66; no. 3; pp. 381 - 400
Main Authors Doerpinghaus, Helen I., Gustavson, Sandra G.
Format Journal Article
LanguageEnglish
Published Malvern American Risk and Insurance Association 01.09.1999
Blackwell Publishing Ltd
Subjects
Adverse selection
Automobile insurance
Business conditions
Consumers
Cost control
Differences
Distribution
Expenditures
Federal regulation
Health insurance
Homeowners insurance
Insurance companies
Insurance coverage
Insurance industry
Insurance markets
Insurance policies
Insurance premiums
Insurance providers
Life insurance
Long term care insurance
Long term health care
Marketing
Medicaid
Medicare
Moral hazard
Nursing homes
Older people
Organizational structure
Price variance
Research methodology
Risk exposure
Size of enterprise
Statistical analysis
Studies
Tenure
Trends
United States > US
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Summary:Financing long-term care is an issue of concern to many Americans, yet private long-term care insurance product sales have experienced slow growth. Pricing problems may in part explain this phenomenon. This study provides the first empirical evidence on pricing in the long-term care insurance market and analyzes the relationship between insurer operating characteristics and premium. The results suggest that prices vary across firms due to size, organizational form, default risk, and tenure in the market, but not due to differences in distribution system. The evidence is also consistent with significant price differences due to contract design variables that control moral hazard and adverse selection.
ISSN:0022-4367
1539-6975
DOI:10.2307/253553