ISSN:
1573-0476
Keywords:
uncertainty
;
insurance
;
renewability
;
competition
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract We propose a guaranteed renewability (GR) insurance in which a sequence of premiums would enable insurers to break even and would be chosen by both low- and high-risk buyers, whether or not they had suffered a loss. The premium schedule would continually decline over time, as the insurer collects more information to determine who the low-risk buyers are. The highest premiums are charged initially to protect the insurer if low-risk individuals leave for the spot market. The concluding portion of the article discusses the limitations of a GR policy in the health and environmental liability area, the most serious being instability in estimates of underlying loss trends.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01083557
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