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Handbook of the Economics of Risk and Uncertainty
book

Handbook of the Economics of Risk and Uncertainty

by Mark Machina, W. Kip Viscusi
November 2013
Beginner content levelBeginner
896 pages
35h 10m
English
North Holland
Content preview from Handbook of the Economics of Risk and Uncertainty
Howard Kunreuther and Erwann Michel-Kerjan
664
The price of insurance is thus very sensitive to the ratio of the amount of capi-
tal to expected liability, needed to preserve one's credit rating. A ratio of 1 is normal
for the combined books of business of many property liability insurers. However, for
catastrophic risk, with its very large tail risk (which severely affects the insurer’s credit
risk), the capital to liability ratio needs to be higher. Indeed, the capital-to-liability ratio
depends on volatility of the catastrophe liability and its correlation with the insurer’s
remaining portfolio. For the catastrophe risk premium for individual ...
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Publisher Resources

ISBN: 9780444536853