Essays in law and economics

<p>The thesis consists of four chapters concerning different topics of Law and Economics. The first chapter deals with economic issues in competition law. In order to distinguish predatory pricing from competition on the merits, the courts in the United States and in the European Union have established cost-based tests that also include an assessment of the market structure. The tests miss a causal connection between conduct and foreclosure. In contrast, Australia and New Zealand make use of a counterfactual analysis that establishes causality. However, the causal connection there relates to the market power and the conduct, and does not answer whether the conduct has only been done because of the foreclosure effects. A counterfactual test could be useful in predation cases if it establishes a causal link between the profitability of the conduct and the foreclosure effect. The second chapter explores the effect of excluding tort law for workplace accidents. In countries with workers’ compensation schemes, employees receive compensation for injuries at work regardless of fault, while private law liability of employers is either limited or fully excluded. The degree of liability matters for workplace safety, and different legal arrangements influence incentives of employers and employees to take care. An empirical analysis of several jurisdictions reveals a consistent pattern. The combination of arrangements that increase private law liability and mitigate moral hazard seems to be important for safety at work. No-fault workers’ compensation with the benefit of effective compensation comes with a cost: more injuries of those, which it seeks to protect. The third chapter assesses the effect of no-fault automobile insurances on safety incentives. In order to examine how no-fault motor vehicle insurance affects accident rates, insurance regimes in various countries are compared. A random effects model on fatality data of 29 countries reveals that some motor vehicle insurance systems increase moral hazard. The incentive to take care seems not to be negatively affected by no-fault rules, but by moral hazard due to limited experience rating. Restrictions on experience rating lower the level of care taken by motorists. A combination of no-fault insurance and flat-rate premiums, as found in New Zealand or the Northern Territory in Australia, has a detrimental effect on the safety of roads. The fourth chapter primarily builds on the finding of the second chapter that the exclusion of tort law for workplace injuries results in higher accident rates. In this respect, the question arises whether health and safety regulation can counteract the detrimental effect by providing deterrence from criminal sanctions. This is particularly relevant for New Zealand where a tendency of the law towards a reliance on regulation and criminal law can be observed. In practice, however, criminal law cannot fully replace common law in establishing incentives to take care, and is not as effective as private law actions.</p>

Essays in law and economics

<p>The thesis consists of four chapters concerning different topics of Law and Economics. The first chapter deals with economic issues in competition law. In order to distinguish predatory pricing from competition on the merits, the courts in the United States and in the European Union have established cost-based tests that also include an assessment of the market structure. The tests miss a causal connection between conduct and foreclosure. In contrast, Australia and New Zealand make use of a counterfactual analysis that establishes causality. However, the causal connection there relates to the market power and the conduct, and does not answer whether the conduct has only been done because of the foreclosure effects. A counterfactual test could be useful in predation cases if it establishes a causal link between the profitability of the conduct and the foreclosure effect. The second chapter explores the effect of excluding tort law for workplace accidents. In countries with workers’ compensation schemes, employees receive compensation for injuries at work regardless of fault, while private law liability of employers is either limited or fully excluded. The degree of liability matters for workplace safety, and different legal arrangements influence incentives of employers and employees to take care. An empirical analysis of several jurisdictions reveals a consistent pattern. The combination of arrangements that increase private law liability and mitigate moral hazard seems to be important for safety at work. No-fault workers’ compensation with the benefit of effective compensation comes with a cost: more injuries of those, which it seeks to protect. The third chapter assesses the effect of no-fault automobile insurances on safety incentives. In order to examine how no-fault motor vehicle insurance affects accident rates, insurance regimes in various countries are compared. A random effects model on fatality data of 29 countries reveals that some motor vehicle insurance systems increase moral hazard. The incentive to take care seems not to be negatively affected by no-fault rules, but by moral hazard due to limited experience rating. Restrictions on experience rating lower the level of care taken by motorists. A combination of no-fault insurance and flat-rate premiums, as found in New Zealand or the Northern Territory in Australia, has a detrimental effect on the safety of roads. The fourth chapter primarily builds on the finding of the second chapter that the exclusion of tort law for workplace injuries results in higher accident rates. In this respect, the question arises whether health and safety regulation can counteract the detrimental effect by providing deterrence from criminal sanctions. This is particularly relevant for New Zealand where a tendency of the law towards a reliance on regulation and criminal law can be observed. In practice, however, criminal law cannot fully replace common law in establishing incentives to take care, and is not as effective as private law actions.</p>

Penerapan Metode Limited-Fluctuation Credibility dalam Menentukan Premi Murni pada Asuransi Kendaraan Bermotor di PT XYZ

<p><strong>Abstract. </strong>This paper discusses the method of limited-fluctuation credibility, also known as classic credibility. Credibility theory is a technique for predicting future premium rates based on past experience data. Limited fluctuation credibility consists of two credibility, namely full credibility if Z = 1 and partial credibility if Z &lt;1. Full credibility is achieved if the amount of recent data is sufficient for prediction, whereas if the latest data is insufficient then the partial credibility approach is used. Calculations for full and partial credibility standards are used for loss measures such as frequency of claims, size of claims, aggregate losses and net premiums. The data used in this paper is secondary data recorded by the company PT. XYZ in 2014. This data contains data on the frequency of claims and the size of the policyholder's partial loss claims for motor vehicle insurance products category 4 areas 1. Based on the results of the application, the prediction of pure premiums for 2015 cannot be fully based on insurance data for 2014 because the credibility factor value is less than 1. So based on the limited-fluctuation credibility method, the prediction of pure premiums for 2015 must be based on manual values for pure premiums as well as insurance data for 2014. If manual values for pure premium is 2,000,000 rupiah, then the prediction of pure premium for 2015 is 1,849,342 rupiah.</p><p><strong>Keywords</strong><strong>: </strong>limited fluctuation credibility, full credibility, partial credibility and partial loss</p>

EU Directive Prohibiting Gender-Based Insurance Rating: Would a South African Court Follow Suit?

The decision of the European Court of Justice in Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier v. Conseil des ministres, Judgment of the Court of Justice (Grand Chamber) of 1 March 2011 Case (C-236/09) sparked international interest and concern as it prohibited the use of gender as a rating variable in the access to and the supply of goods and services. With specific reference to motor-vehicle insurance, gender is widely used to differentiate for purposes of accurate risk classification. South African motor-vehicle insurers use, inter alia, gender as a rating variable to classify risks into certain classes and to determine insurance premiums. A South African court is still yet to decide whether the use of gender as a motor-vehicle insurance rating variable amounts to unfair discrimination or not. In light of South Africa's history of discrimination, case law and equality legislation reflect a deep commitment to substantive equality. This article explores, taking into account a South African court's approach to equality, whether the outcome may be similar to the decision of the European Court of Justice or not.

Implementation of Gaussian Process Regression in Estimating Motor Vehicle Insurance Claims Reserves

This study aims to calculate the allowance for losses by applying Gaussian Process regression to estimate future claims. Modeling is done on motor vehicle insurance data. The data used in this study are historical data on PT XYZ's motor vehicle insurance business line during 2017 and 2019 (January 2017 to December 2019). Data analysis will be carried out on the 2017 - 2019 data to obtain an estimate of the claim reserves in the following year, namely 2018 - 2020. This study uses the Chain Ladder method which is the most popular loss reserving method in theory and practice. The estimation results show that the Gaussian Process Regression method is very flexible and can be applied without much adjustment. These results were also compared with the Chain Ladder method. Estimated claim reserves for PT XYZ's motor vehicle business line using the chain-ladder method, the company must provide funds for 2017 of 8,997,979,222 IDR in 2018 16,194,503,605 IDR in 2019 amounting to Rp. 1,719,764,520 for backup. Meanwhile, by using the Bayessian Gaussian Process method, the company must provide funds for 2017 of 9,060,965,077 IDR in 2018 amounting to 16,307,865,130 IDR, and in 2019 1,731,802,871 IDR for backup. The more conservative Bayessian Gaussian Process method. Motor vehicle insurance data has a short development time (claims occur) so that it is included in the short-tail type of business.

Resolving the Inconsistency Between National and EU Motor Insurance Law. Was Factortame the Solution Nobody Sought?

In this Article, we argue that the uncertainty of UK national motor vehicle insurance law—when viewed with respect to its European Union (EU) parent, the Motor Vehicle Insurance Directive (MVID)—was never satisfactorily addressed, primarily when using the remedy available through the non-contractual liability of the State. The EU enforcement mechanisms were equally haphazard in their effectiveness and success in affording rights to third-party victims. Given the link between the MVID and the free movement of persons and goods, on which the harmonization of insurance protection was based, we present the first Article establishing an argument that those offending aspects of UK national law should have been disapplied. The UK has concluded its agreement to withdraw its membership of the EU—and thus no longer to be bound by EU law and the jurisprudence of the Court of Justice. Yet until the transitional period ends, the UK remained aligned to EU law and those defects present in national law should have been remedied. Therefore, the remedy issued from the Factortame line of case authorities may have proven to be the most effective way to grant access to rights which were denied to third-party victims in the UK. Here we present a justification for its application.