Kenneth Arrow and Karl Borch published several important articles in the early 1960s that can be viewed as the beginning of modern economic analysis of insurance activity. This chapter reviews the main theoretical and empirical contributions in insurance economics since that time. The review...

Objective: The objective of this article is to study the correlations between the most important European insurers and their participation in systemic risk in the insurance sector. We compare systemic risk in different market regimes. Research Design & Methods: We use statistical clustering...

Financial stability is the key objective that sustains and empowers investments and economic groth, or scatters the opportunities when lacking. As growth translates to profitability, and profitability is dependent upon solvalibility, the need for a deep knowledge of all potential risks surfaces....

We study a competitive insurance market in which insurers have an imperfect informative advantage over policyholders. We show that the presence of insurers privately and heterogeneously informed about risk can explain the concentration levels, the persistent profitability and the pooling of risk...

This paper discusses the development of drone insurance and its market. Specifically, we examine drone regulations and management of the risk arising from drone ownership and operations for commercial purposes, followed by our recommendation for coverages in insurance markets

We assess the quantitative importance of reclassification risk in the US health insurance market. Reclassification risk arises because the health conditions of individuals evolve over time, while a typical health insurance contract only lasts for one year. Thus, a change in the health status can...

Empirical evidence suggests that ambiguity is prevalent in insurance pricing and underwriting, and that often insurers tend to exhibit more ambiguity than the insured individuals (e.g., Hogarth and Kunreuther (1989)). Motivated by these findings, we consider a problem of demand for insurance...

With more than $50 trillion in assets worldwide, investment funds run by the insurance industry and pension system are one of the most systemically important elements of the global financial system. In March 2014, following the global and euro area financial and economic crises, the European...

One of the most significant economic developments of the past decade has been the development of innovative risk-financing techniques in the insurance industry. Innovation has been driven by the increase in the frequency and severity of catastrophic losses, capital management needs in the life...

We offer a novel explanation of underwriting volatility in property-liability insurance markets in terms of private uncertainty over public regulatory policy. Underwriting involving random losses to policyholders is one source of risk to the equity value of insurance firms. Solvency regulations,...