Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Financial Pricing of Insurance in the Multiple-Line Insurance Company

Richard D. Phillips, J. David Cummins and Franklin Allen
The Journal of Risk and Insurance
Vol. 65, No. 4 (Dec., 1998), pp. 597-636
DOI: 10.2307/253804
Stable URL: http://www.jstor.org/stable/253804
Page Count: 40
  • Read Online (Free)
  • Download ($9.00)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Financial Pricing of Insurance in the Multiple-Line Insurance Company
Preview not available

Abstract

This paper uses a contingent claims framework to develop a financial pricing model of insurance that overcomes one of the main shortcomings of previous models -- the inability to price insurance by line in a multiple line insurer subject to default risk. The model predicts prices will vary across firms depending upon firm default risk, but within a given insurer prices should not vary after controlling for line-specific liability growth rates. We also analyze an important qualification to this result for insurance groups, where several insurer subsidiaries are owned by a primary insurer or holding company. Empirical tests using data on publicly traded property-liability insurers support the hypotheses: prices vary across firms depending upon overall-firm default risk and the concentration of business among subsidiaries; but within a given firm, prices do not vary by line after adjusting for line-specific liability growth rates.

Page Thumbnails

  • Thumbnail: Page 
[597]
    [597]
  • Thumbnail: Page 
598
    598
  • Thumbnail: Page 
599
    599
  • Thumbnail: Page 
600
    600
  • Thumbnail: Page 
601
    601
  • Thumbnail: Page 
602
    602
  • Thumbnail: Page 
603
    603
  • Thumbnail: Page 
604
    604
  • Thumbnail: Page 
605
    605
  • Thumbnail: Page 
606
    606
  • Thumbnail: Page 
607
    607
  • Thumbnail: Page 
608
    608
  • Thumbnail: Page 
609
    609
  • Thumbnail: Page 
610
    610
  • Thumbnail: Page 
611
    611
  • Thumbnail: Page 
612
    612
  • Thumbnail: Page 
613
    613
  • Thumbnail: Page 
614
    614
  • Thumbnail: Page 
615
    615
  • Thumbnail: Page 
616
    616
  • Thumbnail: Page 
617
    617
  • Thumbnail: Page 
618
    618
  • Thumbnail: Page 
619
    619
  • Thumbnail: Page 
620
    620
  • Thumbnail: Page 
621
    621
  • Thumbnail: Page 
622
    622
  • Thumbnail: Page 
623
    623
  • Thumbnail: Page 
624
    624
  • Thumbnail: Page 
625
    625
  • Thumbnail: Page 
626
    626
  • Thumbnail: Page 
627
    627
  • Thumbnail: Page 
628
    628
  • Thumbnail: Page 
629
    629
  • Thumbnail: Page 
630
    630
  • Thumbnail: Page 
631
    631
  • Thumbnail: Page 
632
    632
  • Thumbnail: Page 
633
    633
  • Thumbnail: Page 
634
    634
  • Thumbnail: Page 
635
    635
  • Thumbnail: Page 
636
    636