There is considerable empirical and experimental evidence that insurance demand issignificantly influenced by an insurance firm’s solvency level. For example, Sommer (1996)and Cummins and Danzon (1997) empirically show that a firm’s financial distress isaccompanied by a decrease in insurance...

This paper empirically studies the impact of consumer reaction to default risk on an insurer's optimal solvency level. Using experimentally obtained data, we derive a price-default risk-demand-curve that serves as an input variable for the insurer's risk strategy. We show that an insurer should...

The potential need for long-term care (LTC) is one of the greatest financial risks faced not only by the elderly, but also by their adult children, who often provide care or financial assistance. We investigate adult children’s role in the demand for LTC insurance. Similar to flood insurance,...

Pursuant to art. 45 of the Solvency II Framework Directive, all insurance undertakings will be obliged to conduct an "Own Risk and Solvency Assessment" (ORSA). ORSA's relevance is not limited only to the second pillar of Solvency II, where mainly qualitative requirements are to be found. ORSA...

This paper investigates the question of how risk management should be embedded in a firm's hierarchy. We take an innovative approach to this question by combining the well-known capital asset pricing framework with game-theoretic thinking. We discover the conditions under which risk information...