Research on long-term care insurance: status quo and directions for future research
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Research on long‑term care insurance: status quo and directions for future research Martin Eling1 · Omid Ghavibazoo1
Received: 4 June 2018 / Accepted: 8 October 2018 © The Geneva Association 2018
Abstract We provide a structured literature review of long-term care (LTC) insurance using main path analysis, a mathematical tool to identify the most significant paths in a citation network. We identify three major research areas (financing, demand, and insurability) and systematically evaluate them based on standard frameworks. We further review established and innovative (insurance) solutions for LTC financing. Our results illustrate the immense difficulties of insuring LTC both on the demand side (e.g., low value of consumption while in care, existence of substitutes) and supply side (e.g., lack of predictability and asymmetric information), explaining the marginal contribution of insurance mechanisms to LTC financing. Combined products that bundle the risks, and public–private partnerships that integrate LTC into the pension systems might help to overcome the insurability limitations. In addition, alternative financing methods that go beyond the idea of risk pooling (LTC bond, LTC put option, equity release) could help to improve the sustainability of LTC financing. Keywords Long-term care · Long-term care insurance · Main path analysis · Citation network · Demand · Financing · Insurability · Literature survey
* Martin Eling [email protected] Omid Ghavibazoo [email protected] 1
Institute of Insurance Economics, University of St. Gallen, Girtannerstrasse 6, 9010 St. Gallen, Switzerland Vol.:(0123456789)
M. Eling, O. Ghavibazoo
Motivation and aim of the paper The organisation and financing of LTC is arguably one of the most important societal tasks of the twenty-first century. Although significant uncertainties in terms of potential need, intensity and duration of LTC provide a powerful rationale for sharing this risk across individuals (Colombo et al. 2011), the market for long-term care insurance (LTCI) is very limited.1 From the academic side, the low demand for LTCI remained largely unexplored until the late 1990s. However, the academic literature on LTC and insurance is now growing exponentially with more than 1200 articles in Web of Science alone (see Appendix 1). While a considerable amount of research on LTC has been published in medical or gerontological journals, a growing number of studies are documented in the fields of business and economics, calling for a structured and timely review of this emerging academic field.2 We provide a structured review of LTC in the context of insurance (see Fig. 1) using an identification technique—main path analysis—that to our knowledge has not yet been used in the insurance field. Based on the review results, we evaluate the literature using three established frameworks (Chen 2001; Outreville 2013; Berliner 1982) and compare our results with the findings from other insurance markets. Our review includes a summary of alternative insurance and financ
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