Post by Sapphire Capital on Sept 2, 2008 20:56:28 GMT 4
Long Term Insurance (LTI) for Addressing Catastrophe Risk
Dwight M. Jaffee
University of California, Berkeley - Finance Group; National Bureau of Economic Research (NBER)
Howard Kunreuther
University of Pennsylvania - The Wharton School - Center for Risk Management; National Bureau of Economic Research (NBER)
Erwann Michel-Kerjan
University of Pennsylvania - The Wharton School - Center for Risk Management
July 2008
NBER Working Paper No. W14210
Abstract:
This paper proposes long-term insurance (LTI) as an alternative to the standard annual homeowners policy using lessons from the mortgage market as a benchmark. LTI has the potential to significantly increase social welfare by reducing insurers' administrative costs, lowering search costs and uncertainty for consumers and providing incentives for long-term investment in mitigation measures to protect property. A two-period model illustrates situations that would make a long-term contract attractive to both insurers and consumers under competitive market conditions.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1230838
Dwight M. Jaffee
University of California, Berkeley - Finance Group; National Bureau of Economic Research (NBER)
Howard Kunreuther
University of Pennsylvania - The Wharton School - Center for Risk Management; National Bureau of Economic Research (NBER)
Erwann Michel-Kerjan
University of Pennsylvania - The Wharton School - Center for Risk Management
July 2008
NBER Working Paper No. W14210
Abstract:
This paper proposes long-term insurance (LTI) as an alternative to the standard annual homeowners policy using lessons from the mortgage market as a benchmark. LTI has the potential to significantly increase social welfare by reducing insurers' administrative costs, lowering search costs and uncertainty for consumers and providing incentives for long-term investment in mitigation measures to protect property. A two-period model illustrates situations that would make a long-term contract attractive to both insurers and consumers under competitive market conditions.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1230838