Capacity as an Indicator of Insurer Insolvency
AbstractThis paper examines factors explaining the underutilization of capacity observed in prior capacity studies. The paper expands previous works in capacity theory by including improved empirical measures for several variables and by explicitly considering reinsurance effects. Two separate estimates of 1986 capacity are developed and examined using regression analysis for 60 U.S. property-casualty insurers. The first measure uses a previously published formulation and excludes reinsurance while the second incorporates reinsurance. Results indicate that when capacity is defined without considering reinsurance, a large proportion of the variance in capacity utilization can be explained by company size, perceived financial strength, product mix, capitalization requirements, organizational form, and risk of investment operations. When capacity is defined to include reinsurance, variance in capacity utilization can be more fully explained with half the number of variables. A company’s perceived financial strength, capitalization requirements, and investment risk prove significant in explaining capacity underutilization.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.
Volume (Year): 15 (1992)
Issue (Month): 2 ()
Contact details of provider:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.