Multiple shadow insurance activities and life insurance policyholder protection

Shi Chen, Wenyu Yao and Fu-Wei Huang

Finance Research Letters, 2021, vol. 38, issue C

Abstract: This paper develops a contingent claim model to evaluate the equity and liabilities of a life insurer who operates multiple shadow insurance activities specified as wealth management products and entrusted loans. We show that multiple shadow insurance operations by the insurer produce superior return performance and help policyholder protection. Increasing the guaranteed rate at an increased optimal margin contributes to insurance stability whereas increasing the participation rate at a decreased optimal margin adversely affects insurance stability.

Keywords: Insurer interest margin; Shadow insurance; Barrier option (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s1544612319313868

DOI: 10.1016/j.frl.2020.101524

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