ACADEMIC ARTICLES

Can Independent Underwriters Benefit Insurers in High-Risk Lines ? A Cournot Market-Game Analysis
by Jiang Cheng and Michael R. Powers                                            

PROFESSIONAL ARTICLES

Une crise financière qui ébranle les colonnes du temple
by Rémi Moreau                                                                            

Une brève histoire des assurances au Moyen Âge
by Martin Boyer                                                                            

Current Events
under the responsibility of Rémi Moreau

1. L’année cyclonique 2008 dans l’atlantique – 2. Les catastrophes économiques ont totalisé 70 milliards de dollars en 2007 3. Les résultats du Lloyd’s pour 2007 – 4. Prolongation du programme national contre les inondations aux États-Unis jusqu’en mars 2009 – 5. L’après-Nargis : une aide de 1 milliard de dollars – 6. Révision à la baisse des dommages accordés aux victimes de la catastrophe de l’Exxon Valdez en 1989 – 7. Le courtier Aon se classe au premier rang dans le monde sur le plan des revenus en 2007 – 8. Quelques chiffres sur l’industrie canadienne de l’assurance de dommages – 9. Les primes mondiales en 2007 : 4 trilliards de dollars – 10. Les rendez-vous de septembre, édition 2008 – 11. Vers un marché dur en assurance aviation – 12. Une ristourne de 3 000 000 de dollars par la mutuelle des municipalités du Québec – 13. Un autre assureur européen innove avec l’assurance au kilomètre – 14. L’assurance des collections rares selon la version du contrat spécialisé "fine art" de Hiscox – 15. Un nouvel outil d’optimisation de tarification et d’analyse des marchés –  16.Détermination de la juste valeur marchande d’une police d’assurance vie – 17. Quelques mots sur les captives en 2007 – 18. Un séisme de 5,4 cause une grosse frayeur à Los Angeles – 19. Obligation d’assurance des chiens dangereux en France – 20. Cybercriminalité en hausse dans le secteur financier – 21. Les dangers du portable, une polémique récurrente 22. La rémunération des risk managers américains – 23. Les commissions contingentes toujours au ban – 24. Risk Management for Insurers - Risk Control, Economic Capital and Solvency II – 25. Qu’est-ce que le run-off ? – 26. Le feu dans le tunnel sous la manche

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Can Independent Underwriters Benefit Insurers in High-Risk Lines?A Cournot Market-Game Analysis
by Jiang Cheng and Michael R. Powers

One of the greatest dangers to the solvency of property-liability insurers is writing large amounts of new business in a high-risk line (i.e., a line of insurance in which a substantial portion of buyers consists of high-risk insureds). This practice is problematic because of both potentially inadequate pricing and potentially lax underwriting. A prominent example of the latter phenomenon was the collapse of many captive insurers in the early to mid-1980s, in which the insurers relied too heavily on independent underwriters motivated solely by increasing premium volume. In this article, we employ a Cournot market-game model to study the financial impact of informed independent underwriters (i.e., unaffiliated underwriters with private information regarding the risk characteristics of insureds) on insurers in high-risk property-liability lines. In a market with a risk-neutral insurer and CARA insureds, we find that the insurer will always do worse by using a risk-neutral underwriter than by operating on a direct-writing basis. However, for an insurer employing mean-variance optimization, the proper combination of underwriter-compensation and capital allocation may lead to better outcomes than direct writing.

Keywords: Independent underwriters, high-risk lines, Cournot market games.

Perturbations extrêmes sur la dérive de mortalité anticipée - Application à un régime de rentes
by Frédéric Planchet, Marc Juillard et Pierre-E. Thérond

The aim of this paper is to propose a realistic and operational model to quantify the systematic risk of mortality included in an engagement of retirement. The model presented is built on the basis of model of Lee-Carter. The stochastic prospective tables thus built make it possible to project the evolution of the random mortality rates in the future and to quantify the systematic risk of mortality.

Keywords: Prospective tables, extrapolation, adjustment, life annuities, stochastic mortality.

Une crise financière qui ébranle les colonnes du temple
by Rémi Moreau

While many financial institutions have suffered in connection subprimes and credit risks in recent months, particularly in the last September and in October, the author tries to identify the most affected players, both in United States and in the European and Asian countries.

He also reviews some financial solutions witch put forward by the Federal Reserve and European Central Banks to help financial institutions and to prevent the financial crisis from spreading. The main idea is not to solve the financial problems or collapse of financial institutions but to create stability in the financial market and to save overall economy in danger.

Then, he examines the Canadian financial sector, both on the side of the bank and insurance sectors. There is no significant impact because of the turmoil of the American crisis, which could harden reinsurance and insurance market.

Une brève histoire des assurances au Moyen Âge
by Martin Boyer

To understand why and how insurance contracts evolved in Western civilization, one needs to analyze and study the tools used by merchants and ship owners to limit their financial risk of doing business. It is important to recall that the insurance contract as we know it in the 21st century was born in the middle ages when the Catholic Church was enthralled in fighting commercial practices it considered unacceptable, such as usury loans. In this paper, I provide three explanations as to why ocean marine insurance evolved much faster than land marine insurance. First, ocean faring vessels were more at risk of piracy than were land caravans. Second, natural catastrophes are more common in the ocean than on land. Finally, ocean vessels carried more much valuable cargo than land caravans.

Les Jeux olympiques d’été de 2008 : regard sur les assurances des Jeux de la XXIXe Olympiade
by Rémi Moreau

Insurance contracts and risk management are critical components in any Olympic Games, but particularly about China’s ability to pull off a successful Olympics, with the country’s problems of pollution, political climate and security. Facing both traditional and special exposures, loss control is critical for any Olympic Games.

The author points out the Olympic event which took place at Beijing last August and he examines the several insurance programs subscribed by the Beijing Organizing Committee, by the National Olympic Committees and the International Olympic Committee. Many insurers were at risk but of course PICC Property & Casualty Co. Ltd has been named official insurance provider for the Olympic Games in Beijing.