TY  - UNPD
A1  - Schlütter, Sebastian
T1  - Captial (!) requirements or pricing constraints? An economic analysis of measures for insurance regulation
N2  - Depending on the point of time and location, insurance companies are subject to different forms of solvency regulation. In modern regulation regimes, such as the future standard Solvency II in the EU, insurance pricing is liberalized and risk-based capital requirements will be introduced. In many economies in Asia and Latin America, on the other hand, supervisors require the prior approval of policy conditions and insurance premiums, but do not conduct risk-based capital regulation. This paper compares the outcome of insurance rate regulation and riskbased capital requirements by deriving stock insurers’ best responses. It turns out that binding price floors affect insurers’ optimal capital structures and induce them to choose higher safety levels. Risk-based capital requirements are a more efficient instrument of solvency regulation and allow for lower insurance premiums, but may come at the cost of investment efforts into adequate risk monitoring systems. The paper derives threshold values for regulator’s investments into risk-based capital regulation and provides starting points for designing a welfare-enhancing insurance regulation scheme.
T3  - ICIR Working Paper Series - No. 3/11 [06.06.11] 
Y1  - 2011
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/77043
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-770435
PB  - International Center for Insurance Regulation
CY  - Frankfurt am Main
ER  -