Pricing Insurance Risk: Reconciling Theory and Practice

Daniel Bauer, Richard D. Phillips and George Zanjani ()
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Daniel Bauer: University of Wisconsin-Madison
Richard D. Phillips: Georgia State University
George Zanjani: University of Alabama

A chapter in Handbook of Insurance, 2025, pp 353-380 from Springer

Abstract: Abstract This chapter starts by applying classical financial theory to the problem of insurance pricing. It proceeds by relaxing the classical assumptions of complete and frictionless markets and reviewing the literature on insurance pricing with various frictional costs. In the penultimate section, we compare and contrast the approaches used in practice with the models offered by academics. We conclude by identifying important areas for future research.

Keywords: Insurance pricing; Financial pricing of insurance; Various frictional costs; Practice model of insurance pricing; CAPM model of insurance pricing; Capital market friction; D80; G22; G12; G13 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-69674-9_11

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DOI: 10.1007/978-3-031-69674-9_11

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