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The Organizational Structure of Insurance Companies: The Role of Heterogeneous Risks and Guaranty Funds

James A. Ligon and Paul D. Thistle

Journal of Risk & Insurance, 2007, vol. 74, issue 4, 851-862

Abstract: We examine a market with observably heterogeneous risks and a government sponsored guaranty fund and consider whether it is optimal to form a single insurer or separate insurers for each consumer type. Given the economic environment, pooling never dominates the formation of separate insurance companies. This result provides an incentive for the phenomenon of insurance fleets.

Date: 2007
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Citations: View citations in EconPapers (5)

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https://doi.org/10.1111/j.1539-6975.2007.00237.x

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