We develop a general equilibrium model of competitive insurance and equity capital markets to show how aggregate asset … and insurance liability risks affect insurance prices and regulation. In the unique equilibrium of the benchmark … unregulated economy, insurers raise external capital solely by selling insurance and no outside equity. We derive the Pareto …

We study the optimal insurance design problem. This is a risk sharing problem between an insured and an insurer. The … for the insurance cover. This risk-adjusted premium calculation principle uses the cost-of-capital approach as it is … suggested (and used) by the regulator and the insurance industry. …