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International Center for Insurance Regulation (ICIR), Universität Frankfurt a. M. >
ICIR Working Paper Series, International Center for Insurance Regulation, Universität Frankfurt >
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http://hdl.handle.net/10419/64129
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| Title: | | Be as safe as possible: A behavioral approach to the optimal corporate risk strategy of insurers  |
| Authors: | | Zimmer, Anja Gründl, Helmut Schade, Christian |
| Issue Date: | | 2012 |
| Series/Report no.: | | ICIR Working Paper Series 06/11 |
| Abstract: | | 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 choose to be default-free rather than having even a very small default probability. This risk strategy is also optimal when assuming substantial transaction costs for risk management activities undertaken to achieve the maximum solvency level. |
| Subjects: | | Behavioral Insurance Risk Management of Insurance Companies |
| Document Type: | | Working Paper |
| Appears in Collections: | | ICIR Working Paper Series, International Center for Insurance Regulation, Universität Frankfurt
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