The following paper discusses the challenge between risk and return in the context of the industrial insurance market in Germany. The industrial insurance market is highly competitive. Companies have to cope with low premium levels and high losses resulting in high underwriting deficits....

As emprical studies show, the policyholders' willingness to pay depends on the security level of the insurance cover. The choice of the security level determines the capital budgeting decision and therefore the cost of capital, as well as the attainable insurance premiums. We call this cost of...