Demand of Insurance under the Cost-of-Capital Premium Calculation Principle

Demand of Insurance under the Cost-of-Capital Premium Calculation Principle

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We study the optimal insurance design problem.This is a risk sharing problem between an insured and an insurer.The main novelty in this paper kt-swled45ps-4a-8csa-vdim-p is that we study this optimization problem under a risk-adjusted premium calculation principle for the insurance cover.

This risk-adjusted premium calculation principle uses the cost-of-capital approach as it is suggested (and used) by the 30x24x24 wall cabinet regulator and the insurance industry.