We compare the demand for insurance under state-dependent and state-independent preferences when allowing for positive premium loading and continuous state space. We show that the comparison does not only depend on how marginal utility of consumption changes across states - as it does under a...

Mutual insurance companies and stock insurance companies are different forms of organized risk sharing: policyholders and owners are two distinct groups in a stock insurer, while they are one and the same in a mutual. This distinction is relevant to raising capital and selling policies in the...

When a spot market monopolist participates in the futures market, he has an incentive to adjust spot prices to make his futures market position more profitable. Rational futures market makers take this into account when they set prices. Spot market power thus creates a moral hazard problem which...

Over recent decades, banks and bank regulators have devoted substantial resources to managing market risk and credit risk. More recently industry and regulatory focus has shifted to the mitigation of operational risk. This article discusses the management process of operational risk in financial...

Based on a unique data set of driving behavior we test whether private information in driving characteristics has significant effects on contract choice and risk in automobile insurance. We define a driving-factor based on overall distance driven, number of car rides, and speeding. Using local...