Ami Ko, Georgetown University

Dynamic Pricing Regulation and Welfare in Insurance Markets

Abstract

While the traditional role of insurers is to provide protection against individuals’ idiosyncratic risks, insurers themselves face substantial uncertainties due to aggregate shocks. To prevent insurers from passing these aggregate risks onto consumers, governments have increasingly adopted dynamic pricing regulations, which limit insurers’ ability to change premiums over time. We evaluate dynamic pricing regulation using an equilibrium model of the U.S. long-term care insurance market, featuring insurers’ lack of commitment and endogenous market structures. We find that stricter dynamic pricing regulation has a limited impact on improving consumer welfare, while it reduces insurer profits and increases market concentration.

Ami Ko is an Assistant Professor of Economics, specializing in public and health economics. Her research develops and estimates economic models to analyze the demand for and the provision health care products/services including long-term care insurance and health insurance in the ACA marketplaces.

Ami received her PhD in Economics from the University of Pennsylvania and her undergraduate degree in Economics from Seoul National University.

You can read more about Ami Ko here

CEBI contact: Thomas Høgholm Jørgensen