Download or read book Rate Regulation and the Cost of Capital in the Insurance Industry written by Robert A. Haugen and published by . This book was released on 1972 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Cost of Capital and Rate Regulation of Property liability Insurance Companies written by Kyung Lyong Lee and published by . This book was released on 1988 with total page 482 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Regulatory Risk and the Cost of Capital written by Burkhard Pedell and published by Springer Science & Business Media. This book was released on 2006-04-20 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt: Austrian Controller Award 2005 This book develops a comprehensive concept of regulatory risk integrating existing theoretical and empirical research. The focus is on explaining how the design of the regulatory system influences the risk of a rate-regulated firm, as well as on elaborating appropriate methods for the determination of the regulatory rate base and the allowed rate of return. Regarding the regulatory rate base, the question of whether market value of capital or book value of assets should be employed and the choice of the depreciation scheme are at the center of the discussion. Specific methodical issues concerning cost of capital assessment for rate-regulated firms are analyzed, i.e. the circularity of rate regulation, the sharing of risks between capital owners and rate payers, the length of the regulatory review period, the regulation of the capital structure as well as the conversion of a post-tax to pre-tax weighted average cost of capital.
Download or read book The Capital Structure of Firms Subject to Price Regulation written by Robert W. Klein and published by . This book was released on 2003 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Automobile and workers' compensation insurance are relatively homogeneous products sold under varying regulatory systems among the states. This paper investigates how price regulation affects the capital structure decisions of profit-maximizing insurers who sell insurance in both competitive and/or regulated markets. Specifically, we test the hypothesis that insurers subject to price regulation will choose to hold less capital. In addition, we hypothesize insurers subject to more stringent regulatory pricing constraints will choose even higher degrees of leverage because the benefits of holding additional amounts of capital are suppressed. We conduct empirical tests using cross-sectional data on insurers and find evidence consistent with both hypotheses. These findings have important implications for insurance price and solvency regulation. Stricter price regulation increases the default risk (i.e., reduces the financial quality) of insurance contracts purchased by individuals and firms.
Download or read book The Cost of Capital and Rate Regulation of Property liability Insurance Companies written by Kyŏng-nyong Yi and published by . This book was released on 1977 with total page 482 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Risk Based Capital written by Lawrence D. Cluff and published by DIANE Publishing. This book was released on 2000 with total page 187 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Implied Cost of Equity Capital in the U S Insurance Industry written by Doron Nissim and published by . This book was released on 2017 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study derives and evaluates estimates of the equity risk premium inferred from the stock prices and analysts' earnings forecasts of U.S. insurance companies. During most of the sample period, April 1983 through September 2012, the quarterly median implied equity risk premium (IERP) of U.S. insurers was relatively stable, fluctuating mildly around an average value of 5.5%. However, during the financial crisis of 2007-2009, the median IERP reached unprecedented levels, exceeding 15% in the first quarter of 2009. Following the financial crisis, the IERP declined substantially but it remained at historically high levels, exceeding 9% on average. In spite of significant differences in operations and financial profile, the median IERP of Life and Health insurers was similar to that of Property and Casualty insurers during most of the sample period. However, during the financial crisis the median IERP of Life and Health insurers was substantially larger than that of Property and Casualty insurers, consistent with the higher sensitivity of Life and Health insurers to fluctuations in financial markets. The differences in the IERP across the insurance sub-industries remained substantial after the crisis, indicating a structural change in the pricing of Life and Health insurers. Consistent with investors demanding relatively high rates of return in periods of poor economic performance or high uncertainty, the IERP is positively related to the credit spread, term spread, and inflation, and negatively related to the 10-year Treasury yield. The relations with firm-specific risk factors are similarly consistent with expectations: the IERP is positively related to market beta, and negatively related to size and the equity-to-assets ratio. These risk factor sensitivities are generally higher for Life and Health insurers as well as during the financial crisis. Finally, consistent with the strong correlations between the IERP and the macro and firm-specific risk factors, the IERP performs well in predicting subsequent excess stock returns. One implication of the results is that the current trend in accounting regulation to eliminate accounting differences across insurance operations may not be desirable.
Download or read book Effectiveness of State Regulation written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2003 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Economics Regulation and Systemic Risk of Insurance Markets written by Felix Hufeld and published by Oxford University Press. This book was released on 2016-10-28 with total page 247 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the importance of insurance in enabling individual and collective social, economic, and financial activities, discussions about the macroeconomic role and risks of insurance markets are surprisingly limited. This book brings together academics, regulators, and industry experts to provide a multifaceted array of research and perspectives on insurance, its role and functioning, and the potential systemic risk it could create. The first part discusses the macroeconomic role of insurance and how insurance is different from banking and general finance. Understanding the differences between the balance sheets of insurers and other financial intermediaries is essential for understanding the potential differences in risk nature and optimal regulation. The second part of the book focuses on the risks managed by the insurance sector and the potential for systemic risk. The chapters discuss the risks both on the asset and liability sides of insurers' balance sheets. The third part of the book covers the impact of regulation on insurance companies. Existing regulation is often complex and has a large impact on insurance companies' decision-making and functioning. The chapters also illustrate the unintended consequences of various forms of regulation. The book concludes with a summary of a survey that has been conducted in collaboration with McKinsey, where insurance executives have been asked about the risks and regulation in the insurance sector. The survey provides guidance for future research on insurance markets.
Download or read book Estimating the Costs of Financial Regulation written by Mr.Andre Santos and published by International Monetary Fund. This book was released on 2012-09-11 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Download or read book Insurance regulation and competition for the 21st century written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2002 with total page 492 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book When Insurers Go Bust written by Guillaume Plantin and published by Princeton University Press. This book was released on 2009-04-11 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the 1990s, large insurance companies failed in virtually every major market, prompting a fierce and ongoing debate about how to better protect policyholders. Drawing lessons from the failures of four insurance companies, When Insurers Go Bust dramatically advances this debate by arguing that the current approach to insurance regulation should be replaced with mechanisms that replicate the governance of non-financial firms. Rather than immediately addressing the minutiae of supervision, Guillaume Plantin and Jean-Charles Rochet first identify a fundamental economic rationale for supervising the solvency of insurance companies: policyholders are the "bankers" of insurance companies. But because policyholders are too dispersed to effectively monitor insurers, it might be efficient to delegate monitoring to an institution--a prudential authority. Applying recent developments in corporate finance theory and the economic theory of organizations, the authors describe in practical terms how such authorities could be created and given the incentives to behave exactly like bankers behave toward borrowers, as "tough" claimholders.
Download or read book Working with State Regulators to Increase Insurance Choices for Consumers written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2004 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Property casualty Insurance Industry written by Coopers & Lybrand and published by . This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report reviews the key features and public policy issues regarding the property & casualty insurance industry in Canada. It begins with an overview of the business and structure of the industry: the nature and composition of the property and casualty business, the industry in the context of the Canadian financial services sector, financial structure, and regulation of the industry. It then discusses the following issues: the financial capacity of the industry to handle claims resulting from a major earthquake; the likelihood of major industry consolidation; potential changes in the industry's distribution system in the near future; and the impact of technology in general.
Download or read book Insurance and Issues in Financial Soundness written by Nigel Davies and published by International Monetary Fund. This book was released on 2003-07-01 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores insurance as a source of financial system vulnerability. It provides a brief overview of the insurance industry and reviews the risks it faces, as well as several recent failures of insurance companies that had systemic implications. Assimilation of banking-type activities by life insurers appears to be the key systemic vulnerability. Building on this experience and the experience gained under the FSAP, the paper proposes key indicators that should be compiled and used for surveillance of financial soundness of insurance companies and the insurance sector as a whole.
Download or read book Policy Form and Rate Regulation in the Property liability Insurance Market written by Junhao Liu and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The regulation of financial products plays an important role in U.S. financial markets. While there are benefits to regulation, policymakers must weigh these benefits against the costs. This dissertation studies the costs of complying with policy form and rate regulation in the U.S. property-liability (P/L) insurance market. In the first chapter, we estimate the cost of complying with regulation by exploiting the rich cross-sectional and time-series variation in regulation, focusing on the regulation of policy forms. The costs of complying with stringent form regulation are significant, approximately 3.1 percent of the general expenses for the average insurer per line of business and year-$1.8 billion for the industry per year. The compliance costs are higher in personal lines of insurance. The burden of these costs falls unevenly on insurers, with the regulatory effects isolated to the firms writing less than $5 million in premiums in a line of business per year. A potential way to reduce regulatory compliance costs is the use of digital technology to streamline the regulatory process. In Chapter 2, we leverage a quasi-experimental policy change which mandates use of an internet-based flow management tool that enables insurers and regulators to exchange form and rate filing information, and find that digitization lowers the costs of complying with regulation. The average insurer per line of business and year in the highest quartile regarding the proportion of business under the mandate saves 4.8 percent of general expenses. Our results also suggest a fixed cost of adopting the technology, with larger cost-saving accruing to firms that adopt the new technology more widely. While Chapters 1 and 2 are closely related, the scope of the cost estimation is different in the two chapters. Chapter 1 focuses on the policy form regulation, and it contrasts stringent form regulation with non-stringent form regulation by measuring the \textit{extra} costs of complying with stringent regulation compared to other types of regulation. In Chapter 2, we consider policy form and rate regulation as a whole and measure the costs of complying with all types of regulation. The two chapters complement each other and, in combination, provide empirical evidence of the costs of insurance product regulation.
Download or read book Solvency Regulation in the Property casualty Insurance Industry written by Patricia Munch and published by . This book was released on 1979 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt:
