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The Evolving Market for Catastrophic Event Risk
Froot, Kenneth A. - 1999
This paper discusses the recent changes in the market for catastrophe risk. These risks have traditionally been distributed through the insurance and reinsurance systems. However, because insurance companies tend to share relatively small amounts of their cat exposures and because insurance...
Persistent link: https://www.econbiz.de/10012471496
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The Market for Catastrophe Risk : A Clinical Examination
Froot, Kenneth A. - 1999
demonstrate that both features deviate from what theory would predict, yet are characteristic of many transactions, not simply …
Persistent link: https://www.econbiz.de/10012471497
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The Market for Catastrophe Risk : A Clinical Examination
Froot, Kenneth A. - 2001
with natural hazards, such as hurricanes and earthquakes. Risk management theory suggests protection by insurers and other …, especially after cat events. We then examine clinical evidence to understand why the theory fails. Specifically, we examine … hints as to why the theory fails. We explore these hints in eight theoretical explanations and find the most compelling to …
Persistent link: https://www.econbiz.de/10012470619
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The Pricing of Event Risks with Parameter Uncertainty
Froot, Kenneth A. - 2001
Financial instruments whose payoffs are linked to exogenous events, such as the occurrence of a natural catastrophe or an unusual weather pattern depend crucially on actuarial models for determining event (e.g., default) probabilities. In many instances, investors appear to receive premiums far...
Persistent link: https://www.econbiz.de/10012470623
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Consumption vs. Production of Insurance
Philipson, Tomas - 1997
some or all of the financial risk associated with the insurance. This paper generalizes the theory of insurance to analyze … the market. The" theory makes cross-sectional predictions on which firms will choose to produce insurance, as well as how … prices and loss experience will vary with the production decision; the theory also predicts which lines of insurance are …
Persistent link: https://www.econbiz.de/10012472586
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On The Pricing of Intermediated Risks : Theory and Application to Catastrophe Reinsurance
Froot, Kenneth A. - 1997
We model the equilibrium price and quantity of risk transfer between firms and financial intermediaries. Value-maximizing firms have downward sloping demands to cede risk, while intermediaries, who assume risk, provide less-than-fully-elastic supply. We show that equilibrium required returns...
Persistent link: https://www.econbiz.de/10012472807
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Home Equity Insurance
Shiller, Robert J. - 1994
Home equity insurance policies, policies insuring homeowners against declines in the price of their homes, would bear some resemblance both to ordinary insurance and to financial hedging vehicles. A menu of choices for the design of such policies is presented here, and conceptual issues are...
Persistent link: https://www.econbiz.de/10012474085
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Deriving Risk Adjustment Payment Weights to Maximize Efficiency of Health Insurance Markets
Layton, Timothy J. - 2016
Risk adjustment of payments to health plans is fundamental to regulated competition among private insurers, which serves as the basis of national health policy in many countries. To date, estimation and evaluation of a risk adjustment model has been a two-step process. In a first step, the...
Persistent link: https://www.econbiz.de/10012456038
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Inferring Risk Perceptions and Preferences using Choice from Insurance Menus : Theory and Evidence
Ericson, Keith Marzilli - 2015
Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on rational expectations, nor does it require access to...
Persistent link: https://www.econbiz.de/10012456874
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Managing Catastrophic Risk
Kunreuther, Howard - 2012
A principal reason that losses from catastrophic risks have been increasing over time is that more individuals and firms are locating in harm's way while not taking appropriate protective measures. Several behavioural biases lead decision-makers not to invest in adaptation measures until after...
Persistent link: https://www.econbiz.de/10012460523