TY  - UNPD
A1  - Brandts, Silke
A1  - Laux, Christian
T1  - ART versus reinsurance : the disciplining effect of information insensitivity
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2005,21
N2  - We provide a novel benefit of "Alternative Risk Transfer" (ART) products with parametric or index triggers. When a reinsurer has private information about his client's risk, outside reinsurers will price their reinsurance offer less aggressively. Outsiders are subject to adverse selection as only a high-risk insurer might find it optimal to change reinsurers. This creates a hold-up problem that allows the incumbent to extract an information rent. An information-insensitive ART product with a parametric or index trigger is not subject to adverse selection. It can therefore be used to compete against an informed reinsurer, thereby reducing the premium that a low-risk insurer has to pay for the indemnity contract. However, ART products exhibit an interesting fate in our model as they are useful, but not used in equilibrium because of basis-risk. Klassifikation: D82, G22
T3  - CFS working paper series - 2005, 21 
KW  - Cat Bonds
KW  - Risk Transfer
KW  - Index Trigger
KW  - Adverse Selection
KW  - Aktienmarkt
KW  - Gewinn
Y1  - 2005
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/3680
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-18119
ER  -