The European insurance industry is awaiting the new EU-wide harmonized Solvency II framework. Before its introduction, it is important to find out which incentive effects can arise from it. Practitioners predict a trend towards consolidation in the insurance sector due to recognition of...

The European insurance industry is awaiting the new EU-wide harmonized Solvency II framework. Before its introduction, it is important to find out which incentive effects can arise from it. Practitioners predict a trend towards consolidation in the insurance sector due to recognition of...

The standard formula of the Solvency II framework employs an approximate value-at-risk approach to define risk-based capital requirements. The parameterization of the standard formula determines how much additional capital insurers need in order to back investments in risky assets. This paper...

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...

Insurance regulation is typically aimed at policyholder protection. In particular, regulators attempt to ensure the financial safety of insurance firms, for example, by means of capital regulation, and to enhance the affordability of insurance, for example, by means of price ceilings. However,...

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...

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...

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...

Insurance regulation is typically aimed at policyholder protection. In particular, regulators attempt to ensure the financial "safety" of insurance firms, for example, by means of capital regulation, and to enhance the "affordability" of insurance, for example, by means of price ceilings....

The standard formula of the Solvency II framework employs an approximate value-at-risk approach to define risk-based capital requirements. The parameterization of the standard formula determines how much additional capital insurers need in order to back investments in risky assets. This paper...