This article considers the joint production of insurance protection and loss prevention by insurers. We first examine the loss distribution of consumers that is potentially the most profitable for insurers. Unlike in the preponderance of the insurance literature, which assumes cost-based pricing...

This paper examines premium determination of voluntary automobile insurance policies and risk classification under Taiwan’s heavily regulated rating system. On the basis of a unique data set, we investigate the appropriateness of the official one-size-fits-all rating formula for insurers by...

Purpose – The paper aims to examine the practical importance of the finding of Mayers and Smith, that underinvestment is a problem when debt exposed to bankruptcy is part of the financial structure. Design/methodology/approach – The paper examines critically the assumptions underlying the...