Inferring Risk Tolerance from Deductibles in Insurance Contracts

Insurance contracts with multiple levels of deductibles

Insurance contracts with multiple levels of deductibles (henceforth MLD contracts) are very common. The major goal of this paper is to suggest theoretical foundations for the prevalence of this type of contracts when agents have different, not necessarily concave, utility functions that are private information. We show that an important property of such contracts is that they reduce risk in the...

Catastrophe Insurance and the Demand for Deductibles

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...

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...

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...