Annuity Markets in Chile : Competition, Regulation - and Myopia?
The author studies annuity rates in Chile and relates them with industry competition. He finds (1) that annuity insurance companies paying higher broker commissions paid lower annuity rates; and (2) a structural break of the long-run elasticity of annuity rates to the risk-free rate in 2001. Moreove...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/08/6940919/annuity-markets-chile-competition-regulation-myopia http://hdl.handle.net/10986/8381 |
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okr-10986-83812021-04-23T14:02:41Z Annuity Markets in Chile : Competition, Regulation - and Myopia? Walker, Eduardo AGENCY PROBLEMS AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY ANNUITY MARKETS ANNUITY PAYMENT ANNUITY RATE ANNUITY RATES ASSETS AUCTION AUCTIONS BANKRUPTCY BENEFICIARIES BOLSA BONDS BROKERS CAPITAL MARKETS CENTRAL BANK COMMISSIONS CONSUMERS COST OF CAPITAL CREDIT RISK DEBT DISCOUNT RATES ELASTICITY EMERGING MARKETS FINANCIAL INSTRUMENTS FUTURE PAYMENTS INDEXED BONDS INFLATION INFLATION RATE INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INTEREST RATE INTEREST RATES INTERNAL RATE OF RETURN INVESTMENT POLICIES INVESTMENT RISK INVESTMENT STRATEGIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE COMPANIES LONGEVITY INSURANCE LONGEVITY RISK MANDATORY SAVINGS MANDATORY SYSTEM MARGINAL COST MARKET RISK MORTALITY TABLES PAYOUT PENSION FUND PENSION FUND ADMINISTRATORS PENSION FUNDS PENSION LAW PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PORTFOLIOS PREMIUMS PRIVATIZATION RATES RATES OF RETURN REAL INTEREST RATE RETIREES RETIREMENT RETIREMENT AGE RISK PREMIUM RISK-FREE RATE SAVINGS SECURITIES SOCIAL SECURITY STATEMENTS STRUCTURAL CHANGE TRANSPARENCY UNDERESTIMATES VALUATION VARIABLE ANNUITIES WEALTH YIELD CURVES The author studies annuity rates in Chile and relates them with industry competition. He finds (1) that annuity insurance companies paying higher broker commissions paid lower annuity rates; and (2) a structural break of the long-run elasticity of annuity rates to the risk-free rate in 2001. Moreover, this structural break coincided with the submission of a new draft pension law proposing greater transparency in annuity markets and a generalized drop in broker commissions. The high commissions charged in the 1990s were partly returned to annuitants as informal (and illegal) cash rebates. Myopic pensioners preferred cash rebates over present values. Thus, the legal threat caused the drop in broker commissions, reduced the illegal practice of cash rebates, increased competition by way of annuity rates, and raised the long-run elasticity to one. 2012-06-18T22:10:18Z 2012-06-18T22:10:18Z 2006-08 http://documents.worldbank.org/curated/en/2006/08/6940919/annuity-markets-chile-competition-regulation-myopia http://hdl.handle.net/10986/8381 English Policy Research Working Paper; No. 3972 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Chile |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
AGENCY PROBLEMS AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY ANNUITY MARKETS ANNUITY PAYMENT ANNUITY RATE ANNUITY RATES ASSETS AUCTION AUCTIONS BANKRUPTCY BENEFICIARIES BOLSA BONDS BROKERS CAPITAL MARKETS CENTRAL BANK COMMISSIONS CONSUMERS COST OF CAPITAL CREDIT RISK DEBT DISCOUNT RATES ELASTICITY EMERGING MARKETS FINANCIAL INSTRUMENTS FUTURE PAYMENTS INDEXED BONDS INFLATION INFLATION RATE INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INTEREST RATE INTEREST RATES INTERNAL RATE OF RETURN INVESTMENT POLICIES INVESTMENT RISK INVESTMENT STRATEGIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE COMPANIES LONGEVITY INSURANCE LONGEVITY RISK MANDATORY SAVINGS MANDATORY SYSTEM MARGINAL COST MARKET RISK MORTALITY TABLES PAYOUT PENSION FUND PENSION FUND ADMINISTRATORS PENSION FUNDS PENSION LAW PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PORTFOLIOS PREMIUMS PRIVATIZATION RATES RATES OF RETURN REAL INTEREST RATE RETIREES RETIREMENT RETIREMENT AGE RISK PREMIUM RISK-FREE RATE SAVINGS SECURITIES SOCIAL SECURITY STATEMENTS STRUCTURAL CHANGE TRANSPARENCY UNDERESTIMATES VALUATION VARIABLE ANNUITIES WEALTH YIELD CURVES |
| spellingShingle |
AGENCY PROBLEMS AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY ANNUITY MARKETS ANNUITY PAYMENT ANNUITY RATE ANNUITY RATES ASSETS AUCTION AUCTIONS BANKRUPTCY BENEFICIARIES BOLSA BONDS BROKERS CAPITAL MARKETS CENTRAL BANK COMMISSIONS CONSUMERS COST OF CAPITAL CREDIT RISK DEBT DISCOUNT RATES ELASTICITY EMERGING MARKETS FINANCIAL INSTRUMENTS FUTURE PAYMENTS INDEXED BONDS INFLATION INFLATION RATE INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INTEREST RATE INTEREST RATES INTERNAL RATE OF RETURN INVESTMENT POLICIES INVESTMENT RISK INVESTMENT STRATEGIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE COMPANIES LONGEVITY INSURANCE LONGEVITY RISK MANDATORY SAVINGS MANDATORY SYSTEM MARGINAL COST MARKET RISK MORTALITY TABLES PAYOUT PENSION FUND PENSION FUND ADMINISTRATORS PENSION FUNDS PENSION LAW PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PORTFOLIOS PREMIUMS PRIVATIZATION RATES RATES OF RETURN REAL INTEREST RATE RETIREES RETIREMENT RETIREMENT AGE RISK PREMIUM RISK-FREE RATE SAVINGS SECURITIES SOCIAL SECURITY STATEMENTS STRUCTURAL CHANGE TRANSPARENCY UNDERESTIMATES VALUATION VARIABLE ANNUITIES WEALTH YIELD CURVES Walker, Eduardo Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| geographic_facet |
Latin America & Caribbean Chile |
| relation |
Policy Research Working Paper; No. 3972 |
| description |
The author studies annuity rates in Chile and relates them with industry competition. He finds (1) that annuity insurance companies paying higher broker commissions paid lower annuity rates; and (2) a structural break of the long-run elasticity of annuity rates to the risk-free rate in 2001. Moreover, this structural break coincided with the submission of a new draft pension law proposing greater transparency in annuity markets and a generalized drop in broker commissions. The high commissions charged in the 1990s were partly returned to annuitants as informal (and illegal) cash rebates. Myopic pensioners preferred cash rebates over present values. Thus, the legal threat caused the drop in broker commissions, reduced the illegal practice of cash rebates, increased competition by way of annuity rates, and raised the long-run elasticity to one. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Walker, Eduardo |
| author_facet |
Walker, Eduardo |
| author_sort |
Walker, Eduardo |
| title |
Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| title_short |
Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| title_full |
Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| title_fullStr |
Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| title_full_unstemmed |
Annuity Markets in Chile : Competition, Regulation - and Myopia? |
| title_sort |
annuity markets in chile : competition, regulation - and myopia? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/08/6940919/annuity-markets-chile-competition-regulation-myopia http://hdl.handle.net/10986/8381 |
| _version_ |
1764406378944790528 |