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This paper examines the history of market development and regulation in the insurance markets of seven Least Developed Countries in Asia. Historical analysis shows that most of the markets were first developed to service expatriates and the interests of expatriates then operating in those countries but disappeared or were nationalized soon after their independence as a sovereign state. All countries have adopted or are in the process of adopting market-oriented economic policies and insurance business has begun to re-emerge. Findings from the investigation of insurance regulation and supervision show that all governments apparently apply principle of national treatment in the markets, but the application is not perfect as they commonly not only impose no statistically justified rules but also apply politics-oriented guidelines and unclear capital, investment and accounting regulations on licensed companies. The reinsurance markets are either undeveloped or are subject to compulsory cession to government insurer or its designee. They also lack clear exit (insolvency) regulation and policyholder protection guidelines.

In recent years, the International Accounting Standards Board (IASB) and its International Financial Reporting Standards (IFRSs) have made great strides toward achieving global accounting convergence. Various countries, including Japan and Canada, are either adopting or converging their national standards with IFRSs. The IASB is now undertaking a comprehensive review of the accounting standards on post-employment benefits, an important part of which is about quantitative disclosures of longevity risk. In this paper we examine how stochastic mortality models may assist with such disclosures. Specifically, we present three concepts that can help defined benefit plans identify the materiality of their longevity risk exposures: (1) longevity value-at-risk, (2) probability of longevity deficit, and (3) the probabilistic corridor rule. We illustrate these concepts with a hypothetical pension plan in Japan.

We examine how a Japanese firm can derive the most value from a captive insurance company. We use actual data on losses, captive operating costs, interest rates and foreign exchange rates to simulate cash flows from a hypothetical pure captive. We examine three domiciles popular with Japanese firms: Bermuda, Hawaii and Guernsey. We find a high likelihood that the captive generates economic value for its Japanese parent firm especially when it operated over multiple years. We find that when the captive reinsures its entire book of business thus acting as a pass-through vehicle to the global reinsurance market, it normally delivers economic value but near to break-even. We also find that the captive can generate high levels of economic value but only by taking on higher levels of operating risk. We find that the value-maximizing strategy is for a Japanese corporation to establish its captive in Bermuda while the risk-minimizing strategy is to establish its captive in Guernsey. We also find that Bermuda would be a better choice than Hawaii for Japanese captives from the viewpoint of risk-return tradeoff.

In this paper, we investigate the rebuild or repair decision that property owners face after damages caused by catastrophic hurricanes such as Katrina in New Orleans. In particular, we consider how the degree of risk aversion and uncertainty affect the decision-making process. A theoretical model is developed using the real-options framework of Dixit and Pindyck (1994). According to the model, the decision to rebuild a property is reached much later when there is a high degree of uncertainty over future social costs and a high discount rate. We demonstrate these effects using simulations with actual numbers from Hurricane Katrina.

This paper empirically examines the adverse selection models by using the data from China’s personal automobile insurance market through the standard positive-correlation test. Results show that higher-risk insurance policyholders do tend to buy insurance with a lower coinsurance rate, which supports the existence of adverse selection in China's automobile insurance market. This is quite a contrast to the findings in mature insurance markets.

Objectives: Little is known about who uses physiotherapy services for whiplash injuries sustained in motor-vehicle accidents. Compensable agencies around Australia are grappling with ways to identify early claimants who are likely to consume different types of health services. The objectives were to identify key characteristics of a typical user of physiotherapy services for motor-vehicle accident-induced whiplash-associated disorders.Method: A dataset was provided by the Motor Accident Commission (MAC) in South Australia which included demographic, socioeconomic and accident information on WAD claimants from 2006-2009. Univariate and multiple logistic regression models were developed to test the association between physiotherapy service use, claimant demographics, socioeconomic status, and accident descriptors.Results: A typical consumer of physiotherapy services for WAD was female, aged between 40 and 79 years, living in upper middle or high socioeconomic suburbs, with legal representation, and who has been assigned at least three MAC injury codes (denoting severe injury). She was the driver of the car. She was wearing a seatbelt at the time of the accident, and the accident occurred on hard dry road surfaces. Her accident was unlikely to be angular.Conclusion: A clear profile of a WAD claimant who would consume physiotherapy services was established.