On the Economics of Postassessments in Insurance Guaranty Funds: A Stakeholders' Perspective
This article proposes a model that suggests there are contagion effects among members of an insurance guaranty fund when postassessments are charged to all other insurers upon the failure of a member company. Indeed, these extraordinary payments are shown to increase the default rate of other firms...
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| Veröffentlicht in: | The Journal of risk and insurance 2010-12, Vol.77 (4), p.857-892 |
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| container_title | The Journal of risk and insurance |
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| creator | Bernier, Gilles Mahfoudhi, Ridha M. |
| description | This article proposes a model that suggests there are contagion effects among members of an insurance guaranty fund when postassessments are charged to all other insurers upon the failure of a member company. Indeed, these extraordinary payments are shown to increase the default rate of other firms in the industry, ultimately lowering the value of corporate claims as well as government tax claims. The model is also used to examine the efficiency of different recoupment mechanisms (both existing and new) used by regulators and insurers to potentially reduce these contagion effects. Analysis allows us to stipulate the conditions under which a "tax carryforward "provision could be more efficient than the usual recoupment mechanisms known as "premium rate surcharge" and "premium tax credit." |
| doi_str_mv | 10.1111/j.1539-6975.2010.01367.x |
| format | Article |
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Indeed, these extraordinary payments are shown to increase the default rate of other firms in the industry, ultimately lowering the value of corporate claims as well as government tax claims. The model is also used to examine the efficiency of different recoupment mechanisms (both existing and new) used by regulators and insurers to potentially reduce these contagion effects. 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Dec 2010</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c7057-641948d21c9fa4c6984301099e8525a7e132d62c4228d00ecf9f59868309e29d3</citedby><cites>FETCH-LOGICAL-c7057-641948d21c9fa4c6984301099e8525a7e132d62c4228d00ecf9f59868309e29d3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/40961648$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/40961648$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,777,781,800,1412,3994,27905,27906,45555,45556,57998,58231</link.rule.ids><backlink>$$Uhttp://econpapers.repec.org/article/blajrinsu/v_3a77_3ay_3a2010_3ai_3a4_3ap_3a857-892.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Bernier, Gilles</creatorcontrib><creatorcontrib>Mahfoudhi, Ridha M.</creatorcontrib><title>On the Economics of Postassessments in Insurance Guaranty Funds: A Stakeholders' Perspective</title><title>The Journal of risk and insurance</title><description>This article proposes a model that suggests there are contagion effects among members of an insurance guaranty fund when postassessments are charged to all other insurers upon the failure of a member company. 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Analysis allows us to stipulate the conditions under which a "tax carryforward "provision could be more efficient than the usual recoupment mechanisms known as "premium rate surcharge" and "premium tax credit."</description><subject>Analysis</subject><subject>Cash</subject><subject>Corporations</subject><subject>Credit insurance</subject><subject>default risk</subject><subject>Dividends</subject><subject>Economics</subject><subject>funds</subject><subject>Guaranty funds</subject><subject>Incentives</subject><subject>Income taxes</subject><subject>Insurance</subject><subject>Insurance claims</subject><subject>Insurance industry</subject><subject>Insurance policies</subject><subject>Insurance premiums</subject><subject>Insurance providers</subject><subject>Liability insurance</subject><subject>Monte Carlo method</subject><subject>Monte Carlo simulation</subject><subject>Policyholders</subject><subject>Recoupment</subject><subject>Risk assessment</subject><subject>Risk management</subject><subject>Shareholders</subject><subject>Stakeholders</subject><subject>Stockholders</subject><subject>Studies</subject><subject>Surcharges</subject><subject>Taxation</subject><subject>Underwriting</subject><issn>0022-4367</issn><issn>1539-6975</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2010</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><sourceid>N95</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><recordid>eNqNkl1v0zAUhiMEEmXwE5AsuNgNKY7jJDYXSNW0dZ0murEiuECyvMRpk6VO8XFG--85WVBhqBfEOrbl87xv_HGCgER0HOH3vh5HSSzDVGbJmFFcpVGcZuPtk2C0TzwNRpQyFnLMPA9eANSU0owKOQq-zy3xK0NO89a26yoH0pbkqgWvAQzA2lgPpLJkZqFz2uaGTDuNE78jZ50t4AOZkBuv78yqbQrj4JhcYb8xua_uzcvgWakbMK9-j0fBl7PTxcl5eDmfzk4ml2Ge0SQLUx5JLgoW5bLUPE-l4DGeREojEpbozEQxK1KWc8ZEQanJS1kmUqQiptIwWcRHwfHgu3Htj86AV-sKctM02pq2AyUTnkhsKZJv_iHrtnMWN6dElCXIZByhtwO01I1RlS1b73TeW6oJ45xlMuUJUuEBammscbpprSkrXH7Ejw_w2AqD935Q8O4vwW0HlcUXqSxUy5WHpe4AHuNiwHPXAjhTqo2r1trtVERVXyqqVn1FqL4iVF8q6qFU1BalF4PUGXy5ve620bXD_3XqXsU6y7DbYTxIY11hcIwNhkgyJSRTK79Gs4-D2U88z-6_N6Eu5p9n_RQNXg8GNfjW7Q04lWmUcvHn4ivwZrvPa3enUI22Xz9N1fmCLeTN9bX6Fv8CAwbzOQ</recordid><startdate>201012</startdate><enddate>201012</enddate><creator>Bernier, Gilles</creator><creator>Mahfoudhi, Ridha M.</creator><general>Blackwell Publishing Inc</general><general>Wiley-Blackwell</general><general>The American Risk and Insurance Association</general><general>American Risk and Insurance Association, Inc</general><general>Blackwell Publishing Ltd</general><scope>BSCLL</scope><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>N95</scope><scope>XI7</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X7</scope><scope>7XB</scope><scope>87Z</scope><scope>88C</scope><scope>88E</scope><scope>8AO</scope><scope>8FI</scope><scope>8FJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>FYUFA</scope><scope>F~G</scope><scope>GHDGH</scope><scope>K60</scope><scope>K6~</scope><scope>K9.</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>M0S</scope><scope>M0T</scope><scope>M1P</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PRINS</scope><scope>Q9U</scope><scope>S0X</scope><scope>7U1</scope><scope>7U2</scope><scope>C1K</scope></search><sort><creationdate>201012</creationdate><title>On the Economics of Postassessments in Insurance Guaranty Funds: A Stakeholders' Perspective</title><author>Bernier, Gilles ; 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| ispartof | The Journal of risk and insurance, 2010-12, Vol.77 (4), p.857-892 |
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| source | RePEc; Wiley Online Library Journals Frontfile Complete; Business Source Complete; Jstor Complete Legacy |
| subjects | Analysis Cash Corporations Credit insurance default risk Dividends Economics funds Guaranty funds Incentives Income taxes Insurance Insurance claims Insurance industry Insurance policies Insurance premiums Insurance providers Liability insurance Monte Carlo method Monte Carlo simulation Policyholders Recoupment Risk assessment Risk management Shareholders Stakeholders Stockholders Studies Surcharges Taxation Underwriting |
| title | On the Economics of Postassessments in Insurance Guaranty Funds: A Stakeholders' Perspective |
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