In a bonus-malus system in car insurance, the bonus class of a customer is updated from one year to the next as a function of the current class and the number of claims in the year (assumed Poisson). Thus the sequence of classes of a customer in consecutive years forms a Markov chain, and most...

This paper identifies three questions concerning the management of risk networks with a central branch, which may be solved using the extensive machinery available for one-dimensional risk models. First, we propose a criterion for judging whether a subsidiary is viable by its readiness to pay...