Economics of Insurance (eBook)

Front Cover 1
Economics of Insurance 4
Copyright Page 5
Table of Contents 10
Preface 8
Chapter 1. Insurance and Economics 16
1. Insurance and Economic Analysis 16
2. Insurance in the National Economy 21
3. Different Markets for Insurance 26
4. The Place of Uncertainty in the Theories of the Austrian School 31
Chapter 2. Insurance and Utility Theory 44
1. The Ordering of Insurance Risks 44
2. The Development of Reinsurance 50
3. The Reinsurance Market 54
4. Some Elements of a Theory of Reinsurance 62
5. The Safety Loading of Reinsurance Premiums 76
6. Equilibrium in a Reinsurance Market 96
7. The Theory of Risk 120
8. The Utility Concept Applied to the Theory of Insurance 149
9. Optimal Insurance Arrangements 159
10. Objectives and Optimal Decisions in Insurance 165
Chapter 3. Insurance and Competitive Equilibrium 178
1. Principles of Premium Calculation 178
2. Insurance Premiums in the Market 183
3. Insurance Premiums and Asset Prices 189
4. Insurance and the Theory of Financial Markets 196
5. Additive Insurance Premiums: A Note 207
6. Static Equilibrium under Uncertainty and Incomplete Markets 213
7. A Theory of Insurance Premiums 224
Chapter 4. Life Insurance 246
1. Early Development of Life Insurance 246
2. Elements of Actuarial Mathematics 248
3. Life Insurance, Consumption and Saving 255
4. Optimal Life Insurance 259
5. Life Insurance and Consumption 276
Chapter 5. Business Insurance 280
1. Insurance bought by Business Enterprises 280
2. Risk Sharing in Business 283
3. Captive Insurance Companies 288
4. Application of Game Theory to some Problems in Automobile Insurance 291
Chapter 6. Household Insurance 308
1. Administrative Expenses 308
2. No-Claim Bonus and Merit Rating 314
3. The Market for Household Insurance 319
4. The Optimal Insurance Contract in a Competitive Market 325
Chapter 7. Uninsurable Risks 330
1. Conditions that a Risk is Insurable 330
2. Adverse Selection 334
3. Moral Hazard 340
4. The Monster in Loch Ness 346
5. Ethics, Institutions and Optimality 350
6. The Price of Moral Hazard 361
7. Insuring and Auditing the Auditor 365
Chapter 8. Risk Theory and Government Supervision 378
1. Is Regulation of Insurance Companies Necessary? 378
2. Risk theory and Serendipity 390
Author Index 410
Subject Index 412