The Geneva papers on risk and insurance. Issues and practice最新文献

As the cyber insurance market is expanding and cyber insurance policies continue to mature, the potential of including pre-incident and post-incident services into cyber policies is being recognised by insurers and insurance buyers. This work addresses the question of how such services should be priced from the insurer's viewpoint, i.e. under which conditions it is rational for a profit-maximising, risk-neutral or risk-averse insurer to share the costs of providing risk mitigation services. The interaction between insurance buyer and seller is modelled as a Stackelberg game, where both parties use distortion risk measures to model their individual risk aversion. After linking the notions of pre-incident and post-incident services to the concepts of self-protection and self-insurance, we show that when pricing a single contract, the insurer would always shift the full cost of self-protection services to the insured; however, this does not generally hold for the pricing of self-insurance services or when taking a portfolio viewpoint. We illustrate the latter statement using toy examples of risks with dependence mechanisms representative in the cyber context.

Supplementary information: The online version contains supplementary material available at 10.1057/s41288-023-00289-7.

Several regulated health insurance markets include the option for consumers to choose a voluntary deductible. An important motive for this option is to reduce moral hazard. In return for a voluntary deductible, consumers receive a premium rebate, which is typically community rated. Under community rating, voluntary deductibles are particularly attractive for low-risk consumers. Since these people use relatively little medical care, the total moral hazard reduction might be relatively small compared to the total healthcare spending. This paper examines the potential moral hazard reduction under risk-rated premiums. We use Chile as a case study due to institutional features that make it a valid benchmark for other countries. Our simulations show that in the presence of self-selection and under a uniform percentage moral hazard reduction across risk types, the absolute moral hazard reduction from a voluntary deductible is indeed expected to be larger in a system with risk-rated premiums than in a system with community-rated premiums. Nevertheless, sensitivity checks show that this conclusion might no longer hold as the percentage moral hazard reduction is lower for high-risk individuals compared to low-risk individuals.

The increasing threat of cyberattacks has resulted in increased efforts by both the U.K. government and regulatory authorities to coordinate efforts to influence cybersecurity risk management practices in the U.K. insurance sector, focusing on cyber risk underwriters. This paper provides an evaluation of these arrangements. It first provides a descriptive overview of the key U.K. regulatory authorities and the evolution of their efforts over the past decade, as well as the scope for broader collaborations with industry and member-based associations and international organisations. It then evaluates the effectiveness of these efforts by providing a multi-method study of the incidence, nature and evolution of cost of data breaches, investment in computer systems and software intangible assets at risk of cyberattack, and a content analysis of annual reports of both U.K. regulators and a sample of U.K. insurers. The findings suggest that while both the total costs of data breaches and the size of investment in computer systems and software intangibles at risk of cyberattack have gradually increased over time, the degree of engagement with cyber as a reporting issue by both cyber insurers and financial regulators has not. It is concluded that while these efforts have been apparently successful in avoiding a large-scale, systemic cyberattack on the U.K. insurance industry, there are significant gaps and overlaps in the system of cyber regulatory oversight.

Cyber incidents are among the most critical business risks for organisations and can lead to large financial losses. However, previous research on loss modelling is based on unassured data sources because the representativeness and completeness of op-risk databases cannot be assured. Moreover, there is a lack of modelling approaches that focus on the tail behaviour and adequately account for extreme losses. In this paper, we introduce a novel 'tempered' generalised extreme value (GEV) approach. Based on a stratified random sample of 5000 interviewed German organisations, we model different loss distributions and compare them to our empirical data using graphical analysis and goodness-of-fit tests. We differentiate various subsamples (industry, size, attack type, loss type) and find our modified GEV outperforms other distributions, such as the lognormal and Weibull distributions. Finally, we calculate losses for the German economy, present application examples, derive implications as well as discuss the comparison of loss estimates in the literature.

This paper investigates the institutional determinants of insurance demand in Africa. We used a panel of 42 countries over the period 1996-2017. A system GMM approach was used for the estimations. Consistent with previous results, we find that institutional quality has positive and significant effects on insurance penetration in Africa. Specifically, regulatory quality, rule of law, control of corruption, political stability and absence of violence, and government effectiveness are the five institutional quality indicators that have positive and significant effects on the demand for total insurance and life insurance. However, only regulatory quality, control of corruption and government effectiveness are positively associated with non-life insurance demand. This indicates that governments should improve the business environment and strengthen the political environment to boost insurance development in Africa.

Supplementary information: The online version contains supplementary material available at 10.1057/s41288-022-00278-2.