Does Reinsurance Need Reinsurers?

Guillaume Plantin

Journal of Risk & Insurance, 2006, vol. 73, issue 1, 153-168

Abstract: The reinsurance market is the secondary market for insurance risks. It has a very specific organization. Direct insurers rarely trade risks with each other. Rather, they cede part of their primary risks to specialized professional reinsurers who have no primary business. This article offers a model of equilibrium in reinsurance and capital markets in which professional reinsurers arise endogenously. Their role is to monitor primary insurers credibly, so that insurers can raise capital more easily. In equilibrium, the financial structure of primary insurers consists of a mix of reinsurance and outside capital. The comparative statics yield empirical predictions which are broadly in line with a number of stylized facts from the reinsurance market.

Date: 2006
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Citations: View citations in EconPapers (25)

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https://doi.org/10.1111/j.1539-6975.2006.00169.x

Related works:
Working Paper: Does reinsurance need reinsurers? (2003)
Working Paper: Does Reinsurance Need Reinsurers? (2003)
Working Paper: Does Reinsurance Need Reinsurers?
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