How Can Insurance Companies Compete With MutualInsurers? The Role of Commitment

Renaud Bourlès ()

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Abstract: The aim of this paper is to analyze the impact of the existence of mutual firms on the behavior of insurance companies and more precisely to study in which situations an insurance company can enter a market controlled by mutual arrangements. Our approach differs from the existing literature as we integrate the investment choices of the insurance company and the fact that, because it commits on a fix contract, it can become insolvent. In such a situation we are able tocharacterize the unique optimal choices of the monopolistic company and the conditions favoringits appearance.

Keywords: Insurance market; Mutual firms; Commitment; Insolvency (search for similar items in EconPapers)
Date: 2006
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00410765v1
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Related works:
Working Paper: On the Emergence of Private Insurance in Presence of Mutual Agreements (2007)
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