In this article, we establish a model of competitive insurance markets based on Rothschild and Stiglitz (1976) where insurers can perform risk classification tests either before insurance contracts are issued (underwriting) or when coverage claims are filed (post-loss test). However, insurers...

We advance the literature starting from the work by Dixit (2000), who considers the effect of the principle of good faith on adverse selection. Introducing a post-loss risk misrepresentation testing in a competitive insurance market model, we identify a sufficient condition to guarantee that a...

Appointed actuaries are responsible for estimating the largest liability on property-casualty insurance companies' balance sheet. Actuarial independence is crucial in safeguarding accurate estimates, where this independence is self-regulated by actuarial professional institutions. However,...

We propose a new reserve error measure net of loss development forecasting error using the most basic actuarial technique of estimating loss development. We argue that the proposed measure is better for capturing managerial discretion than the traditional reserve error measures due to its...

We apply Moulin's notion of egalitarian equivalent cost sharing of a public good to the problem of insurance capitalization and capital allocation where the liability portfolio is fixed. We show that this approach yields overall capitalization and cost allocations that are Pareto efficient,...

Using cross-state panel auto insurance premium data from 2007 to 2012 in the U.S., this study provides evidence that individual purchases of private auto insurance were excessively reduced during and after the U.S. subprime mortgage. Analyses show that the credit crunch triggered by a shock in...

This paper studies the effects of company risk and guaranty funds on life insurance in force using company-by-state level data during the 1985-2010 period. Our primary objective is to use the variation in the timing of guaranty fund adoptions across states to identify the impact of public...

We study how the return of internal capital markets (ICMs) and the risk of ICMs differ across three alternative organizational forms: publicly-held stock insurers, privately-held stock insurers and mutual insurers. Because of the different combination of owner, manager and customer functions,...

We examine which firms are targets of cyberattacks and how they are affected. We find that cyberattacks cause firms to reassess the risks that they are exposed to and their consequences, so that they have real effects on firm policies even when targets are not financially constrained....