Equilibrium in a Reinsurance Market.¶
Borch, K. (1962). Equilibrium in a Reinsurance Market. Econometrica, 30(3), 424-444.
Cited by¶
2 citations across 2 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Preparation
- Not insurance. `risk_pooling` and insurance compensate for loss after a triggering event; preparation reduces the cost or latency of the response before and during it.
This sourceFoundational treatment of risk pooling and insurance as compensation for loss after a triggering event.
- Not insurance. `risk_pooling` and insurance compensate for loss after a triggering event; preparation reduces the cost or latency of the response before and during it.
- Risk Pooling
- Risk transfer moves risk from one party to another (e.g., buying insurance from an insurer transfers your medical risk to the insurance company, which must still bear or reinsure that risk); Borch (1962) shows that in a reinsurance market only aggregate risk ultimately remains, with idiosyncratic risk pooled away among insurers.
This sourceDemonstrates that in a Pareto-optimal reinsurance pool only aggregate risk remains undiversified; idiosyncratic risk is fully pooled away among participants, distinguishing pooling from transfer.
- Risk transfer moves risk from one party to another (e.g., buying insurance from an insurer transfers your medical risk to the insurance company, which must still bear or reinsure that risk); Borch (1962) shows that in a reinsurance market only aggregate risk ultimately remains, with idiosyncratic risk pooled away among insurers.
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