TITLE
"Underwriting Best Shares of Excess Layers," Journal of Insurance Issues, John
M. Cozzolino and Peter J. Mikolaj. October 1993, Vol. XVI, No.
2, pp. 41-58.
ABSTRACT
The application of utility theory to insurance is incomplete without the inclusion of the
structure of risk sharing; to limit the use of utility to accept or reject decisions
misses its power to explain the real world of excess insurance and reinsurance. The fine
subdivision of risk which is routinely achieved by insurance institutions can be explained
on this basis. Practical methods of evaluating and pricing excess layers are given. This
model appears to be in broad agreement with the behavior of experienced underwriters and
thus can form the decision basis of a reinsurers assumption of risk.
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