Efficient contracts for sharing risk will allocate risk according to comparative advantage. When risks meet the typical criteria for insurability, in particular independence, the comparative advantage is straightforward and insurers are able to diversify risk by pooling together many...

Although financial pricing models imply that profits of property- liability insurance firms should conform to an unpredictable time series process, cycles are widely reported. Some controversy exists as to whether the "underwriting cycle" is a mere accounting artifact or whether it has real...