Contracts and Insurance Group Formation by Myopic Players

Insurance Contracts and Securitization

High correlations between risks can increase required insurer capital and/or reduce the availability of insurance. For such insurance lines, securitization is rapidly emerging as an alternative form of risk transfer. The ultimate success of securitization in replacing or complementing traditional insurance and reinsurance products depends on the ability of securitization to facilitate and/or be...

Informal Insurance, Enforcement Constraints, and Group Formation

Canceling of Insurance Contracts

In this paper we consider an insurer who has incomplete information about the claim frequency of the risk process. He therefore calculates the premium on the basis of a prior distribution for the claim frequency. Future information might then reveal that it is no longer optimal for the insurer to continue to offer the insurance under the current conditions. We consider a model where, at certain...

Finding Pareto Optimal Insurance Contracts

This note deals with on-line computation or learning of Pareto optimal insurance contracts. We account for the fact that the loss distribution often is unknown, unavailable, or intractable. Alternatively, the contracting parties could be inexperienced. In both cases losses must be simulated or observed, one at a time, these causing iterated revisions of the premium. The mechanical nature of pro...

Exclusive contracts in health insurance

Competition between insurance companies for employees of a firm often increases the prices and reduces the availability of high-quality health plans offered to employees. An insurance company can reduce competition by signing an exclusive contract, which guarantees that the company is the only insurance provider. The study assesses whether exclusive contracts can alleviate the negative conseque...