Economics of Scale and Sorting in Pure vs. Mutual Insurance Societies: Evidence from Historical Data

Lena Nekby, Mahmood Arai and Michael Lundholm ()

No 2001:9, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: Based on unique Swedish historical panel data on voluntary Swedish sick insurance societies 1902-1910, we test the hypothesis od economies of scale in sick insurance provision. We report results indicating that pure insurance societies charging only premium ex ante do not exhibit returns to scale, while mutual insurance societies, who levy both an ex ante premium and an ex post assessment, do. We argue that this is due to a sorting mechanism implying that pure insurance societies attract high risk workers as they expand.

Keywords: friendly societies; sick insurance; health insurance; returns to scale (search for similar items in EconPapers)
JEL-codes: G22 I18 N23 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2001-09-12
New Economics Papers: this item is included in nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2001_0009

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