Presenting theoretical foundations and empirical research, this text introduces the reader to the core issues and analytical tools of insurance economics, examining in detail a host of key factors including supply and demand, regulation and social insurance.

This book examines the behavior of individuals at risk and insurance industry policy makers involved in selling, buying and regulation.

The theory of insurance is presented in this book, discussed from the viewpoint of the theory of economics of uncertainty. The principle of premium calculation which the book uses is based on economic equilibrium theory and differs from many of the premium systems discussed by actuaries.Reinsurance is developed in the framework of general economic equilibrium theory under uncertainty. Here ordering of risks, preferences and utility theory play an important role. The book discusses the markets for insurance and divides them into three classes: (i) life insurance (ii) business insurance and (iii) household insurance, and these classes are each treated extensively in three separate chapters. Finally uninsurable risks are presented under "asymmetric information". Here moral hazard and adverse selection are treated and illustrations are given, some based on game theory.

The Economics of Property-Casualty Insurance presents new research and findings on key aspects of the economics of the property-casualty insurance industry. The volume explores the industrial organization, regulation, financing, and taxation of this business. The first paper, on external financing and insurance cycles, contains a wealth of information on trends and patterns in the industry's financial structure. The last essay, which compares performance of stock and mutual insurance companies, takes a fresh look at the way a company's organizational structure affects its responses to different economic situations. Two papers focus on rate regulation in the auto insurance industry, and provide broad overviews of the structure and economics of the insurance industry as a whole. Also addressed are the system of regulating insurance companies in the United States, who insures the insurers, and the effects of tax law changes in the 1980s on the prices of insurance policies.

Written for advanced undergraduate and master’s level courses, this book builds from a base of asymmetric information issues to discuss a wide array of topics and is illustrated with some timely examples. Covers diverse issues such as risk aversion, expected utility, and moral hazard within the pure theory of insurance Provides a clear exposition of the necessary mathematics, a feature which cannot be found in readers on the topic Utilizes an undergraduate economics major level of math Uses the simplest economic models possible to keep the text intuitive Introduces more mathematically complex techniques such as basic optimization for students wishing to 'go further' in their analysis

Pt. 1. The economics of insurance and the macroeconomic role of insurance -- What is insurance and how does it differ from general finance? / Christian Thimann -- The macroeconomic role of insurance / Denis Kessler, Amélie de Montchalin, and Christian Thimann -- How the insurance industry manages risk / Denis Duverne and John Hele -- pt. 2. Financial stability and the possibilities of systemic risk -- Risks of life insurers : recent trends and transmission mechanisms / Ralph S.J. Koijen and Motohiro Yogo -- Measuring systemic risk for insurance companies / Viral V. Acharya, Thomas Philippon, and Matthew Richardson -- Measuring interest rate risk in the life insurance sector : the U.S. and the U.K. / Daniel Hartley, Anna Paulson and Richard J. Rosen -- pt. 3. Regulation -- How the insurance industry's asset portfolio responds to regulation / Bo Becker -- Spillover effects of risk regulation on the asset side to asset markets / Andrew Ellul, Chotibhak Jotikasthira, and Christian T. Lundblad -- A regulatory framework for systemic risk in the insurance industry / Felix Hufeld -- pt. 4. Open questions going forward from the insurance sector -- The big questions for the insurance sector : findings from a survey of insurance companies / Luca Pancaldi and Uwe Stegemann