A Dynamic Model of Extreme Risk Coverage : Resilience and Efficiency in the Global Reinsurance Market

This paper presents a dynamic model of the reinsurance market for catastrophe risks. The model is based on the classical capacity-constraint assumption. Reinsurers choose every year the quantity of risk they cover and the level of external capital...

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Bibliographic Details
Main Authors:	Lemoyne de Forges, Sabine, Bibas, Ruben, Hallegatte, Stephane
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADVERSE SELECTION AGENTS AGGREGATE DEMAND ALLOCATION AMOUNT OF CAPITAL AMOUNT OF RISK ASSURANCE BANK POLICY BANKRUPTCY BANKRUPTCY RISK BUDGETING BUSINESS OPPORTUNITIES BUSINESS RISKS BUY BACK BUY BACKS CAPACITY CONSTRAINT CAPACITY CONSTRAINTS CAPITAL ALLOCATION CAPITAL COSTS CAPITAL MARKET CAPITAL MOVEMENTS CAPITAL STRUCTURE CAPITALIZATION CAPITALIZATIONS CASUALTY INSURANCE CATASTROPHE BONDS CATASTROPHE INSURANCE CATASTROPHE REINSURANCE CATASTROPHES CATASTROPHIC RISKS CEDANT CEDANTS CEDING INSURER CLIMATE CLIMATE CHANGE CLIMATE EXTREMES COINSURANCE CORPORATE GOVERNANCE COST OF CAPITAL COST OF EQUITY COST OF REINSURANCE COVERAGE DEBT DEFAULT PROBABILITIES DEFAULT PROBABILITY DEFAULT RISK DEMAND ELASTICITY DEMAND FUNCTION DISASTERS DIVIDEND DYNAMIC MODEL EARNED PREMIUM ECONOMIC GROWTH ECONOMIC THEORY EQUILIBRIUM PRICE EQUITY CAPITAL EXPOSURE EXTREME EVENT EXTREME EVENTS FAIR GLOBAL INSURANCE GLOBAL MARKET GLOBAL REINSURANCE GLOBAL REINSURANCE MARKET GUARANTY FUNDS HOLDING HURRICANE HURRICANES ILLIQUIDITY INDEMNITY INSTRUMENT INSURANCE COMPANIES INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE REGULATION INSURANCE SECTOR INSURED LOSSES INTERNATIONAL BANK IPO LIABILITY LIABILITY SIDE LIMITED LIABILITY LONG-TERM COST LOWER PRICES MARKET BEHAVIOR MARKET CAP MARKET CAPITALIZATION MARKET CONDITIONS MARKET DATA MARKET DEMAND MARKET EFFICIENCY MARKET EQUILIBRIUM MARKET POWER MARKET PRICE MARKET PRICES MARKET RISK MARKET RISKS MARKET SEGMENTATION MARKET SHARE MARKET SHARES MARKET STRUCTURE MARKET SUPPLY MORAL HAZARD NATURAL DISASTERS OLIGOPOLISTIC MARKET OLIGOPOLY OUTPUT OUTPUTS PERFECT INFORMATION POLICYHOLDERS PORTFOLIO PREMIUMS PRICE INCREASES PRICE INDEX PROBABILITY OF DEFAULT PROBABILITY OF DEFAULTS PROGRAMS PROPORTIONAL REINSURANCE PUBLIC POLICY RATE OF RETURN RATES REGULATOR REGULATORY CONSTRAINT REGULATORY REQUIREMENTS REINSURANCE REINSURANCE CAPACITY REINSURANCE COMPANIES REINSURANCE CONTRACTS REINSURANCE MARKETS REINSURERS RETROCESSION RETURN RISK AVERSION RISK EVALUATION RISK MANAGEMENT RISK MANAGEMENT TOOL RISK OF DEFAULT RISK PREMIUM RISK SHARING RISK-FREE INVESTMENTS SCENARIOS SECURITIES SENSITIVITY ANALYSES SHAREHOLDER SHAREHOLDERS SOLVENCY STORM SURGE SURPLUS SUSTAINABLE DEVELOPMENT SYSTEMIC RISK TREATIES TREATY UNDERWRITING
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110922160728 http://hdl.handle.net/10986/3571