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Mortgage life insurance: a rationale for a time limit in switching rights

hal.structure.identifierLaboratoire d'Economie de Dauphine [LEDa]
dc.contributor.authorVilleneuve, Bertrand
HAL ID: 745441
ORCID: 0000-0001-7485-9262		*
dc.date.accessioned2014-10-28T09:25:59Z
dc.date.available2014-10-28T09:25:59Z
dc.date.issued2014-09
dc.identifier.urihttps://basepub.dauphine.fr/handle/123456789/14060
dc.language.isoenen
dc.subjectMortgageen
dc.subjectLife insuranceen
dc.subjectRisk classificationen
dc.subjectRegulationen
dc.subject.ddc332en
dc.subject.classificationjelG.G2.G22en
dc.subject.classificationjelG.G2.G21en
dc.subject.classificationjelG.G1.G18en
dc.titleMortgage life insurance: a rationale for a time limit in switching rightsen
dc.typeArticle accepté pour publication ou publié
dc.description.abstractenI examine competition in the sector of mortgage life insurance, in particular the periodic switching right (PSR), by which the borrower can change his insurer once every period (say, every year). The PSR is likely to have pro competitive effects (lower premium), but by the same move, to lead to excessive segmentation. The main theoretical prediction of the PSR is that, in equilibrium, everyone will pay every year a premium reflecting his current risk, meaning that the risk of future risk evolution is not covered. This destruction of insurance is appreciated negatively by consumers. The trade-off is between, on the one hand, a lower price for insurance, and on the other hand, a lower quality of insurance. I simulate the cost of the PSR and find about 5–15 % of the total insurance cost. This order of magnitude is slightly smaller than the benefit one can expect from increased competition. All in all, a switching right limited in time would bring the benefits of competition and avoid most of the cost of segmentation.en
dc.relation.isversionofjnlnameMathematics and Financial Economics
dc.relation.isversionofjnlvol8
dc.relation.isversionofjnlissue4
dc.relation.isversionofjnldate2014-09
dc.relation.isversionofjnlpages473-487
dc.relation.isversionofdoi10.1007/s11579-014-0124-2en
dc.relation.isversionofjnlpublisherSpringeren
dc.subject.ddclabelEconomie financièreen
dc.relation.forthcomingnonen
dc.description.halcandidateoui
dc.description.readershiprecherche
dc.description.audienceInternational
hal.identifierhal-01685921*
hal.version1*
hal.update.actionupdateMetadata*
hal.author.functionaut


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