Longevity risk is the probability of surviving more than own financial resources. This paper aims to define the 4 characteristics of the insurance market for longevity risk. First, it identifies the aging of the population 5 between the OECD countries and the need for long-term care services (i.e., their quality of life). Second, it 6 tries to summarize the main characteristics of the insurance market for longevity risk from the literature 7 point of view. According to the financial literature, the market to ensure the aging population's long-term 8 needs can be considered a puzzle as there are some constraints from the two sides of the market. From the 9 demand point of view, two issues limit the request for insurance products: the role of the State and 10 misunderstanding about the exposure at risk by the population. At the same time, there are other constraints 11 from the supply point of view: the adverse selection and moral hazard issues that impact the pricing of 12 longevity risk. All these constraints limit the growth of this market. Third, it identifies some suggestions for 13 further investigation in the growing field of financial literature. This paper contributes to the existing 14 literature by identifying the constraints that avoid the insurance market's growth for longevity risk and by 15 remembering some solutions to reassess the role of the welfare state.
The main characteristics of the insurance market for longevity risk: a literature review
Starita, Maria Grazia
2021-01-01
Abstract
Longevity risk is the probability of surviving more than own financial resources. This paper aims to define the 4 characteristics of the insurance market for longevity risk. First, it identifies the aging of the population 5 between the OECD countries and the need for long-term care services (i.e., their quality of life). Second, it 6 tries to summarize the main characteristics of the insurance market for longevity risk from the literature 7 point of view. According to the financial literature, the market to ensure the aging population's long-term 8 needs can be considered a puzzle as there are some constraints from the two sides of the market. From the 9 demand point of view, two issues limit the request for insurance products: the role of the State and 10 misunderstanding about the exposure at risk by the population. At the same time, there are other constraints 11 from the supply point of view: the adverse selection and moral hazard issues that impact the pricing of 12 longevity risk. All these constraints limit the growth of this market. Third, it identifies some suggestions for 13 further investigation in the growing field of financial literature. This paper contributes to the existing 14 literature by identifying the constraints that avoid the insurance market's growth for longevity risk and by 15 remembering some solutions to reassess the role of the welfare state.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.