The impact of reinsurance for insurance companies
The study provides empirical evidence for the effect of reinsurance on solvency, profitability, and taxes of primary insurers. Our main finding is that primary insurers increasing in the use of reinsurance exhibit lower capital ratios. This impact involves the segments of health insurance, composite insurance, title insurance, and non-life insurance. Our interpretation is that reinsurance and capital can be seen as substitutes for improving solvency. This implies that, by sharing their risk with reinsurers, primary insurers can benefit from a relief on capital. Additional outcomes display an important relationship between demand and supply of reinsurance at the firm level, as we observe that, growing in the used reinsurance; primary insurers are more prone to providing reinsurance to other firms.
Showing items related by title, author, creator and subject.
Fedele, A; Tedeschi, P (Palgrave Macmillan, 2015)This paper tackles the issue of unverifiable quality of after-sales insurance services, such as a prompt reimbursement of damages. A dynamic model is introduced in order to allow reputation to emerge as a means of disciplining ...
Islam A; Stillman S; Worswick C (2017)The impact that an unforeseen event has on household welfare depends on the extent to which household members can take actions to mitigate the direct impact of the shock. In this paper, we use nine years of longitudinal ...