Purchasing reinsurance reduces insurers’ insolvency risk by stabilizing loss experience, increasing capacity, limiting … costs. However, transferring risk to reinsurers is expensive. The cost of reinsurance for an insurer can be much larger than … the actuarial price of the risk transferred. In this article, we analyze empirically the costs and the benefits of …

et al (2006) have proposed a cost function specification that measures separately insurer efficiency in handling risk … pooling, risk management, and financial intermediation functions. We investigate the insurer characteristics that determine …. Independent agents and high capitalization reduce the cost efficiency of risk pooling. Certain characteristics such as being a …