Research

Life Insurance and Annuity Pricing during the Financial Crisis, Revisited

Daniel Bauer, Lawrence Powell, Boheng Su, George Zanjani.

Abstract:

We reexamine life insurance and annuity pricing during the 2008 financial crisis. In contrast with previous research, we find that insurers sold policies at significantly elevated markups over their fundamental values during the crisis months and, moreover, that statutory accounting pressures had the effect of increasing rather than decreasing prices. We show that the experience in 2008 was not extraordinary but instead mirrored earlier episodes where corporate borrowing rates rose quickly, such as 1994 and 1999.

Price Subsidies and the Demand for Automobile Insurance

Boheng Su, Sharon Tennyson.

Abstract:

This paper tests for regulation-induced adverse selection in the Massachusetts automobile insurance market during the regulated period 1990-2005. The paper demonstrates the application of the Poterba-Finkelstein (2014) unused-observables test for adverse selection in a regulated insurance market using group-level panel data. Differences between rates that incorporate state-mandated restrictions and those based on actuarial estimates provide data on the unused-observables needed for the test. Consistent with regulation-induced adverse selection, unused observables are statistically significant and positive in estimated models of both insurance purchases and loss costs. Robustness checks support the inference that higher-risk drivers account for the results.

Life Insurance Investment - Do Insurance-Fund Relationships imply Skill

Paul Obermann, Sugata Ray, Boheng Su, George Zanjani.

Abstract:

This paper explores the differences of investment performance, risk-taking behavior and trading incentives between insurance companies that with and without affiliations to “professional” asset managers. …

Shame or No Shame? On Insurance Companies’ Fossil Fuel Investment

Boheng Su.