Journal ArticleDOI
The Impact of Firm Risk on Property-Liability Insurance Prices
TLDR
In this paper, the authors examined the impact of an insurer's level of insolvency risk on the prices the insurer obtains for its products in the property-liability insurance market.Abstract:
This article examines the impact of an insurer's level of insolvency risk on the prices the insurer obtains for its products in the property-liability insurance market. The measures of insolvency risk used are those implied by the option pricing model of insurance. The key finding is the existence of a negative relation between insolvency risk and insurance prices. This implies that property-liability insurers are penalized for default risk through lower prices, despite the existence of guaranty funds. Other firm-specific determinants of insurance prices are also identified. The results have significant implications for insurance researchers and regulators.read more
Citations
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Journal ArticleDOI
The Cost of Duplicative Regulation: Evidence from Risk Retention Groups
TL;DR: The authors analyzes the differences between risk retention groups (RRGs) and standard insurers specializing in commercial liability insurance to determine the cost of duplicative regulation and finds that the costs associated with multi-state regulation are significantly higher than those for single-entity regulation.
Journal ArticleDOI
On the Corporate Demand for Insurance: Evidence From the Global Reinsurance Market
TL;DR: This article analyzed the extent to which reinsurance purchases by the global property-liability insurance industry vary across countries and assessed the relative importance of country level factors compared with firm level factors.
Journal ArticleDOI
Regulation of Reinsurance Recoverables: Protection or Protectionism?
TL;DR: In this article, the authors measure the impact of insurers' balance sheet entries for the provision for unauthorized reinsurance on the price of insurance and find no significant relation between the use of unauthorized reins insurance and price, suggesting the required collateralization of recoverables is not necessary to protect U.S. insurers and consumers.
Journal ArticleDOI
Catastrophe insurance equilibrium with correlated claims
TL;DR: This paper showed that when customers know their claims are correlated, this correlation can cause positive-sloping demand at low prices, and that because of this, a catastrophe insurance market can fail.
References
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Journal ArticleDOI
Elements of Econometrics.
Ian Domowitz,Jan Kmenta +1 more
TL;DR: The Elements of Econometrics as mentioned in this paper is a textbook for upper-level undergraduate and master's degree courses and may usefully serve as a supplement for traditional Ph.D. courses in economics.
Book
Elements of econometrics
TL;DR: The emphasis is on simplification whenever possible, assuming the readers know college algebra and basic calculus, and Jan Kmenta explains all methods within the simplest framework, and generalizations are presented as logical extensions of simple cases.
Journal ArticleDOI
Contractual Provisions, Organizational Structure, and Conflict Control in Insurance Markets
David Mayers,Clifford W. Smith +1 more
TL;DR: In this article, the authors provide a foundation for a positive theory of insurance contracting with examples of its testable predictions and argue that incentive conflicts arise when discretionary action is authorized and that contractual provisions and organizational structures control sources of conflict within the insurance market.
Journal ArticleDOI
Price, Financial Quality, and Capital Flows in Insurance Markets
TL;DR: In this article, the authors developed a model of price determination in insurance markets, which predicts that the price of insurance, measured by the ratio of premiums to discounted losses, is inversely related to insurer default risk.
Journal ArticleDOI
Stock Versus Mutual Ownership Structures: The Risk Implications
TL;DR: In this paper, the authors provide empirical tests of the risk differences between two types of ownership structure in the property-liability insurance industry and provide empirical evidence that suggests stock insurers have more risk than mutuals where the risk inherent in future cash flows is proxied by the variance of the loss ratio.
Related Papers (5)
Price, Financial Quality, and Capital Flows in Insurance Markets
Stock Versus Mutual Ownership Structures: The Risk Implications
On the Corporate Demand for Insurance: Evidence from the Reinsurance Market
David Mayers,Clifford W. Smith +1 more