Diss.-Basel.

Diss.-Basel.

Thesis--Universität te Groningen. / Includes bibliographical references.

Thesis (Ph. D.)--University of Wisconsin--Madison, 1983. / Typescript. Vita. eContent provider-neutral record in process. Description based on print version record. Includes bibliographical references (leaves 145-156).

Thesis--Universität Bern.

Thesis--Universität Bern.

Inaug.-diss.--Göttingen.

Inaug.-diss.--Berlin. / Lebenslauf.

This dissertation investigates several aspects of the economics of insurance markets. First, conditions under which policies with deductible provisions, coinsurance provisions, or premium rebates are optimal are given. Results of previous papers on indemnity costs are considered as special cases. For both personal and commercial lines of insurance, further applications consider income taxes, interest income and acquisition costs. Second, the effect of individuals' characteristics on the trade-off between risk-sharing and incentives in a competitive insurance market affected by moral hazard is studied. An increase in the utility cost of effort decreases both prevention and coverage, while an increase in productivity of effort decreases loss frequencies and increases coverage. Decreases of utility in the loss state increase both prevention and coverage. Additional results establish the effect of wealth and risk aversion changes. Third, features of insurance markets that affect the use of reinsurance are examined. An active reinsurance market exists when the direct market is imperfectly competitive. The manager of an insurance firm with monopoly power takes reinsurance in preference to holding this on own account. Market power in the reinsurance market also restricts reinsurance. The manager of a monopsonistic insurer takes reinsurance when risk aversion is greater than that of clients; this is consistent with the interests of owners. The use of reinsurance is then decreasing with the ratio of policy-holder to manager risk aversion coefficients. Costs incurred by either insurers or reinsurers in the reinsurance market reduce the use of reinsurance, while costs incurred by insurers in the original transaction leave coverage provided by insurers themselves unchanged. / Business, Sauder School of / Graduate

This dissertation examines several aspects of decision-making within the U.S. insurance industry, both from the perspective of the consumer and from the perspective of the insurance company. The first essay examines the relation between the demand for life insurance and the occurrence of catastrophes. Prior research suggests that the occurrence of a catastrophe may lead to increases in risk mitigation, risk perception, and the demand for insurance. Given the extensive damage inflicted by major natural disasters, such a phenomenon is intuitive for property risk. However, the literature includes theory and evidence that suggest a broader behavioral perspective, and I therefore examine the possible link between catastrophes and subsequent demand for insurance against mortality risk. Based on U.S. state-level data for the period 1997 through 2008, I provide evidence of a significant positive relationship between catastrophes and life insurance demand. The finding holds both for states directly affected by the event and for neighboring states. In addition, evidence suggests that post-catastrophe life insurance demand is sensitive to the size of the catastrophe. In addition to consumer decision-making, I also examine decision-making from the perspective of the insurer. Separate streams of empirical research suggest that firms may make adjustments toward a target capital structure, and that active internal capital markets (ICMs) exist within a variety of industries. While evidence supports the existence of targeting behavior on behalf of firm management and the existence of ICMs, no studies have examined how deviations from target capital structure relate to the use of ICMs. Based on a sample of affiliated property-casualty insurance companies and three commonly used measures of leverage, this study provides the first evidence of a link between deviations from target leverage and ICM activity. The findings suggest that affiliated property-casualty insurers do have target leverage ratios and that ICM activity is related to deviations from target leverage, where overleveraged insurers tend to cede more internal reinsurance and underleveraged insurers tend to cede less internal reinsurance. / A Dissertation submitted to the Department of Risk Management/Insurance, Real Estate and Legal Studies in partial fulfillment of the requirements for the degree of Doctor of Philosophy. / Spring Semester, 2011. / February 11, 2011. / Life Insurance Demand, Catastrophes, Internal Capital Markets, Capital Structure / Includes bibliographical references. / James M. Carson, Professor Co-Directing Dissertation; Kathleen A. McCullough, Professor Co-Directing Dissertation; Pamela Coats, University Representative; Patricia Born, Committee Member; Cassandra R. Cole, Committee Member; Randy E. Dumm, Committee Member.