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    <title>EconStor Collection: ICIR Working Paper Series, International Center for Insurance Regulation, Universität Frankfurt</title>
    <link>http://hdl.handle.net/10419/64125</link>
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  <item rdf:about="http://hdl.handle.net/10419/69627">
    <title>The risk-shifting behavior of insurers under different guarantee schemes</title>
    <link>http://hdl.handle.net/10419/69627</link>
    <description>Title: The risk-shifting behavior of insurers under different guarantee schemes
&lt;br/&gt;
&lt;br/&gt;Authors: Dong, Ming; Gründl, Helmut; Schlütter, Sebastian
&lt;br/&gt;
&lt;br/&gt;Abstract: Insurance guarantee schemes aim to protect policyholders from the costs of insurer insolvencies. However, guarantee schemes can also reduce insurers' incentives to conduct appropriate risk management. We investigate stock insurers' risk-shifting behavior for insurance guarantee schemes under the two different financing alternatives: a flat-rate premium assessment versus a risk-based premium assessment. We identify which guarantee scheme maximizes policyholders' welfare, measured by their expected utility. We find that the risk-based insurance guarantee scheme can only mitigate the insurer's risk-shifting behavior if a substantial premium loading is present. Furthermore, the risk-based guarantee scheme is superior for improving policyholders' welfare compared to the flat-rate scheme, when the mitigating effect takes place.</description>
  </item>
  <item rdf:about="http://hdl.handle.net/10419/69627">
    <title>The risk-shifting behavior of insurers under different guarantee schemes</title>
    <link>http://hdl.handle.net/10419/69627</link>
    <description>Title: The risk-shifting behavior of insurers under different guarantee schemes
&lt;br/&gt;
&lt;br/&gt;Authors: Dong, Ming; Gründl, Helmut; Schlütter, Sebastian
&lt;br/&gt;
&lt;br/&gt;Abstract: Insurance guarantee schemes aim to protect policyholders from the costs of insurer insolvencies. However, guarantee schemes can also reduce insurers' incentives to conduct appropriate risk management. We investigate stock insurers' risk-shifting behavior for insurance guarantee schemes under the two different financing alternatives: a flat-rate premium assessment versus a risk-based premium assessment. We identify which guarantee scheme maximizes policyholders' welfare, measured by their expected utility. We find that the risk-based insurance guarantee scheme can only mitigate the insurer's risk-shifting behavior if a substantial premium loading is present. Furthermore, the risk-based guarantee scheme is superior for improving policyholders' welfare compared to the flat-rate scheme, when the mitigating effect takes place.</description>
  </item>
  <item rdf:about="http://hdl.handle.net/10419/64136">
    <title>Capital requirements or pricing constraints? An economic analysis of measures for insurance regulation</title>
    <link>http://hdl.handle.net/10419/64136</link>
    <description>Title: Capital requirements or pricing constraints? An economic analysis of measures for insurance regulation
&lt;br/&gt;
&lt;br/&gt;Authors: Schlütter, Sebastian
&lt;br/&gt;
&lt;br/&gt;Abstract: Depending on the point of time and location, insurance companies are subject to different forms of solvency regulation. In modern regulation regimes, such as the future standard Solvency II in the EU, insurance pricing is liberalized and risk-based capital requirements will be introduced. In many economies in Asia and Latin America, on the other hand, supervisors require the prior approval of policy conditions and insurance premiums, but do not conduct risk-based capital regulation. This paper compares the outcome of insurance rate regulation and risk-based capital requirements by deriving stock insurers' best responses. It turns out that binding price floors affect insurers' optimal capital structures and induce them to choose higher safety levels. Risk-based capital requirements are a more efficient instrument of solvency regulation and allow for lower insurance premiums, but may come at the cost of investment efforts into adequate risk monitoring systems. The paper derives threshold values for regulator's investments into risk-based capital regulation and provides starting points for designing a welfare-enhancing insurance regulation scheme.</description>
  </item>
  <item rdf:about="http://hdl.handle.net/10419/64135">
    <title>Will Solvency II market risk requirements bite? The impact of Solvency II on insurers' asset allocation</title>
    <link>http://hdl.handle.net/10419/64135</link>
    <description>Title: Will Solvency II market risk requirements bite? The impact of Solvency II on insurers' asset allocation
&lt;br/&gt;
&lt;br/&gt;Authors: Höring, Dirk
&lt;br/&gt;
&lt;br/&gt;Abstract: The European insurance industry is among the largest institutional investors in Europe. Therefore, major reallocations in their investment portfolios due to the new risk-based economic capital requirements introduced by Solvency II would cause significant disruptions in European capital markets and corporate financing. This paper studies whether the new regulatory capital requirements for market risk are a binding constraint for European insurers by comparing the market risk capital requirements of the Solvency II standard model with the Standard &amp; Poor's rating model for a fictitious, but representative, European-based life insurer. The results show that for a comparable level of confidence, the rating model requires 68% more capital than the standard model for the same market risks. Hence, Solvency II seems not to be a binding capital constraint for market risk and thus would not significantly influence the insurance companies' investment strategies.</description>
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