TY  - UNPD
A1  - Dong, Ming
A1  - Gründl, Helmut
A1  - Schlütter, Sebastian
T1  - The risk-shifting behavior of insurers under different guarantee schemes
N2  - Insurance guarantee schemes aim to protect policyholders from the costs of insurer insolvencies. However, guarantee schemes can also reduce insurers’ incentives to conduct appropriate risk management. We investigate stock insurers’ risk-shifting behavior for insurance guarantee schemes under the two different financing alternatives: a flat-rate premium assessment versus a risk-based premium assessment. We identify which guarantee scheme maximizes policyholders’ welfare, measured by their expected utility. We find that the risk-based insurance guarantee scheme can only mitigate the insurer’s risk-shifting behavior if a substantial premium loading is present. Furthermore, the risk-based guarantee scheme is superior for improving policyholders’ welfare compared to the flat-rate scheme when the mitigating effect occurs.
T3  - ICIR Working Paper Series - No. 12/12 [16.12.13] 
KW  - insurance guarantee schemes
KW  - risk-shifting
KW  - consumer protection
Y1  - 2013
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/73671
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-736718
PB  - International Center for Insurance Regulation
CY  - Frankfurt am Main
ER  -