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Deductible insurance and the transfer of risk

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TitleInfo
Title
Deductible insurance and the transfer of risk
Name (type = personal)
NamePart (type = family)
Gaffney
NamePart (type = given)
Christopher
NamePart (type = date)
1978-
DisplayForm
Christopher Gaffney
Role
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author
Name (type = personal)
NamePart (type = family)
BEN-ISRAEL
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ADI
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ADI BEN-ISRAEL
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Advisory Committee
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chair
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Boros
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Endre
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Endre Boros
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Advisory Committee
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internal member
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Jeong
NamePart (type = given)
Myong
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Myong Jeong
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Advisory Committee
Role
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internal member
Name (type = personal)
NamePart (type = family)
Ruszczynski
NamePart (type = given)
Andrzej
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Andrzej Ruszczynski
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Advisory Committee
Role
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internal member
Name (type = personal)
NamePart (type = family)
Zabarankin
NamePart (type = given)
Michael
DisplayForm
Michael Zabarankin
Affiliation
Advisory Committee
Role
RoleTerm (authority = RULIB)
outside member
Name (type = corporate)
NamePart
Rutgers University
Role
RoleTerm (authority = RULIB)
degree grantor
Name (type = corporate)
NamePart
Graduate School - New Brunswick
Role
RoleTerm (authority = RULIB)
school
TypeOfResource
Text
Genre (authority = marcgt)
theses
OriginInfo
DateCreated (qualifier = exact)
2014
DateOther (qualifier = exact); (type = degree)
2014-10
CopyrightDate (encoding = w3cdtf)
2014
Place
PlaceTerm (type = code)
xx
Language
LanguageTerm (authority = ISO639-2b); (type = code)
eng
Abstract (type = abstract)
This thesis develops a deepened understanding of insurance and its benefits, focusing on practical aspects of insurance coverage and risk reduction. It is easy to see that the purchase of insurance increases the expected loss suffered by the insured, otherwise the insurer’s expected profit would be negative. In view of this, we show that insurance is a variance-reducing mechanism. We first prove that the customer’s variance is less than the variance that would be experienced if insurance was not purchased, and further show that the variance of an insured loss X is equal to the sum of the covariances of the insured and insurer losses with X. As insurance increases the insured’s expected loss and decreases the variance, we develop a mean-variance model of insurance demand, showing how the relationship between the premium and the insured’s risk preference defines the demand for insurance. We verify Arrow’s classical (utility-based) result that the optimal policy has full coverage above a non-zero deductible and consider the insurer’s perspective, showing that the customer can be induced to purchase the insurer’s optimal policy. Next, we consider different forms of coinsurance. We show that the optimal straight coinsurance policy is inferior to the optimal deductible policy, while coinsurance combined with either a stop-loss limit or a deductible is equivalent to a deductible policy (in the optimum). We also show that, in each of the coinsurance cases, the optimal policy involves partial coverage if the premium exceeds the expected reimbursement. Finally, we consider the system composed of the insured and insurer, discussing how certain customers may receive discounted premiums that are subsidized by other customers and showing how the customer and the company share in the variance. We then discuss a benefit of insurance; in the case of a single insurer and a single customer, the sum of their individual variances is less than the variance in the uninsured case, and in the case of a single insurer and multiple insured, the variance of this system is smaller than the sum of the individual uninsured variances if the insurer reimbursements are sufficiently uncorrelated.
Subject (authority = RUETD)
Topic
Operations Research
RelatedItem (type = host)
TitleInfo
Title
Rutgers University Electronic Theses and Dissertations
Identifier (type = RULIB)
ETD
Identifier
ETD_5861
PhysicalDescription
Form (authority = gmd)
electronic resource
InternetMediaType
application/pdf
InternetMediaType
text/xml
Extent
1 online resource (ix, 109 p. : ill.)
Note (type = degree)
Ph.D.
Note (type = bibliography)
Includes bibliographical references
Subject (authority = ETD-LCSH)
Topic
Insurance--United States
Subject (authority = ETD-LCSH)
Topic
Deductibles (Insurance)
Note (type = statement of responsibility)
by Christopher Gaffney
RelatedItem (type = host)
TitleInfo
Title
Graduate School - New Brunswick Electronic Theses and Dissertations
Identifier (type = local)
rucore19991600001
Location
PhysicalLocation (authority = marcorg); (displayLabel = Rutgers, The State University of New Jersey)
NjNbRU
Identifier (type = doi)
doi:10.7282/T3TB15CC
Genre (authority = ExL-Esploro)
ETD doctoral
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Rights

RightsDeclaration (ID = rulibRdec0006)
The author owns the copyright to this work.
RightsHolder (type = personal)
Name
FamilyName
Gaffney
GivenName
Christopher
Role
Copyright Holder
RightsEvent
Type
Permission or license
DateTime (encoding = w3cdtf); (qualifier = exact); (point = start)
2014-09-19 09:39:31
AssociatedEntity
Name
Christopher Gaffney
Role
Copyright holder
Affiliation
Rutgers University. Graduate School - New Brunswick
AssociatedObject
Type
License
Name
Author Agreement License
Detail
I hereby grant to the Rutgers University Libraries and to my school the non-exclusive right to archive, reproduce and distribute my thesis or dissertation, in whole or in part, and/or my abstract, in whole or in part, in and from an electronic format, subject to the release date subsequently stipulated in this submittal form and approved by my school. I represent and stipulate that the thesis or dissertation and its abstract are my original work, that they do not infringe or violate any rights of others, and that I make these grants as the sole owner of the rights to my thesis or dissertation and its abstract. I represent that I have obtained written permissions, when necessary, from the owner(s) of each third party copyrighted matter to be included in my thesis or dissertation and will supply copies of such upon request by my school. I acknowledge that RU ETD and my school will not distribute my thesis or dissertation or its abstract if, in their reasonable judgment, they believe all such rights have not been secured. I acknowledge that I retain ownership rights to the copyright of my work. I also retain the right to use all or part of this thesis or dissertation in future works, such as articles or books.
Copyright
Status
Copyright protected
Availability
Status
Open
Reason
Permission or license
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Technical

RULTechMD (ID = TECHNICAL1)
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ETD
OperatingSystem (VERSION = 5.1)
windows xp
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