Leverage and reinsurance effects on loss reserves in the United Kingdom’s property–casualty insurance industry

We examine the relation between loss reserving errors, leverage and reinsurance in the UK's property-casualty insurance industry. We find that financially weak insurers under-estimate reserves to reduce leverage, and so pre-empt costly regulatory scrutiny. However, at very high leverage, insurers over-reserve, suggesting a non-linear relation between leverage and reserving policy. We also investigate whether monitoring by reinsurers reduces reserving errors, and find that highly reinsured insurers are less likely to make loss reserve errors. However, the use of proportional reinsurance does not affect loss reserve accuracy

Leverage and reinsurance effects on loss reserves in the United Kingdom’s property–casualty insurance industry

We examine the relation between loss reserving errors, leverage and reinsurance in the UK's property-casualty insurance industry. We find that financially weak insurers under-estimate reserves to reduce leverage, and so pre-empt costly regulatory scrutiny. However, at very high leverage, insurers over-reserve, suggesting a non-linear relation between leverage and reserving policy. We also investigate whether monitoring by reinsurers reduces reserving errors, and find that highly reinsured insurers are less likely to make loss reserve errors. However, the use of proportional reinsurance does not affect loss reserve accuracy

Managing policy lapse risk in Sweden's life insurance market between 1915 and 1947

We examine the challenges that Swedish life insurers faced in managing the lapse risk of policies written on the lives of the industrial urban working-class between 1915 and 1947. We observe that with the threat of State socialization of insurance in the 1930s, industrial life insurers modified their business practices to better control policy lapses. Using firm-level data, we also analyze the effect of socio-economic changes, such as rising real wages, interest rate fluctuations and unemployment on life insurance policy lapses. Our results support contemporary tests of the emergency fund and interest rate explanations for the voluntary premature termination of life insurance policies

Competing models of organizational form: risk management strategies and underwriting profitability in the Swedish fire insurance market between 1903 and 1939

Mutual and stock insurers have coexisted and competed against each other in insurance markets for centuries. In this article, we examine the risk management strategies and underwriting profitability of the different organizational forms in Sweden's property fire insurance market between 1903 and 1939. We demonstrate that stock insurers acted as intermediaries between policyholders and reinsurers to operate effectively in the potentially high-risk segments of the fire insurance market. In contrast, nationwide mutual insurers kept larger reserves to balance fluctuations in claims experiences, while local insurance pools relied on social obligation and trust to mobilize capital after adverse fire events.</jats:p

Managing policy lapse risk in Sweden's life insurance market between 1915 and 1947

We examine the challenges that Swedish life insurers faced in managing the lapse risk of policies written on the lives of the industrial urban working class between 1915 and 1947. We observe that with the threat of State socialisation of insurance in the 1930s, industrial life insurers modified their business practices to better control policy lapses. Using firm-level data, we also analyse the effect of socio-economic changes, such as rising real wages, interest rate fluctuations and unemployment on life insurance policy lapses. Our results support contemporary tests of the emergency fund and interest rate explanations for the voluntary premature termination of life insurance policies.Published online: 22 Feb 2018Effektivitet och jämlikhet i privat och offentlig försäkring: En analys av det svenska sjukförsäkringssystemet 1900-195