On the Emergence of Private Insurance in Presence of Mutual Agreements
AbstractThe aim of this paper is to analyze the impact of the existence of mutual firms on the behavior of an insurance company and more precisely to study in which situations a private insurance firm may emerge in presence of an incumbent mutual firm. Our approach differs from the existing literature as we integrate the investment choices of the company and the fact that, because it commits on a fix contract, it can become insolvent. In such a situation we are able to characterize the unique optimal choices of an entrant company and the conditions favoring or preventing its appearance.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5821.
Date of creation: 29 Jun 2007
Date of revision:
Insurance market; Mutual firms; Commitment; Insolvency;
Other versions of this item:
- Renaud Bourlès, 2006. "How Can Insurance Companies Compete With MutualInsurers? The Role of Commitment," Working Papers halshs-00410765, HAL.
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-24 (All new papers)
- NEP-BEC-2007-11-24 (Business Economics)
- NEP-IAS-2007-11-24 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Ray Rees & Hugh Gravelle & Achim Wambach, 1999. "Regulation of Insurance Markets," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 24(1), pages 55-68, June.
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- David Mayers & Clifford Smith, 2002. "Ownership Structure and Control: Property-Casualty Insurer Conversion to Stock Charter," Journal of Financial Services Research, Springer, vol. 21(1), pages 117-144, February.
- Doherty, Neil A & Dionne, Georges, 1993. " Insurance with Undiversifiable Risk: Contract Structure and Organizational Form of Insurance Firms," Journal of Risk and Uncertainty, Springer, vol. 6(2), pages 187-203, April.
- Smith, Bruce D & Stutzer, Michael J, 1990. "Adverse Selection, Aggregate Uncertainty, and the Role for Mutual Insurance Contracts," The Journal of Business, University of Chicago Press, vol. 63(4), pages 493-510, October.
- Raj Chetty, 2006. "A Bound on Risk Aversion Using Labor Supply Elasticities," NBER Working Papers 12067, National Bureau of Economic Research, Inc.
- Laux, Christian & Muermann, Alexander, 2006. "Mutual versus stock insurers: Fair premium, capital, and solvency," CFS Working Paper Series 2006/26, Center for Financial Studies (CFS).
- Hansmann, Henry, 1985. "The Organization of Insurance Companies: Mutual versus Stock," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(1), pages 125-53, Spring.
- Lena Nekby, 2004. "Pure Versus Mutual Health Insurance: Evidence From Swedish Historical Data," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(1), pages 115-134.
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