GUARANTEED RENEWABILITY WITH GROUP INSURANCE

This paper investigates a multiple-period level premium insurance poli cy equilibrium in a model in which loss probabilities increase for a f ixed time period for a set of persons buying insurance in a group. We show that a level-premium sequence which induces risk averse persons t o become and remain members of the group exists. We also show that the availability of the Medicare program can prevent the emergence of opt imal level-premium private group insurance, but that a system of bonus es for remaining in the group can permit optimality to be retained.