We show that an equilibrium always exists in the Rothschild-Stiglitz insurance market model with adverse selection when insurers can o¤er either nonparticipating or participating policies, i.e. insurance contracts which may involve policy dividends or supplementary calls for premium. The equilibrium allocation coincides with the Miyazaki-Spence-Wilson equilibrium allocation, which may involve c...

In this paper we deal with the problem of valuing the surrender option embedded in a participating life insurance policy with a minimum interest rate guaranteed. This feature is an American-style put option that enables the policyholder to sell back the contract to the insurer at the surrender value. By means of a recursive binomial tree à la Cox, Ross and Rubinstein (1979) we compute, first of...

I the health insurance market, small employers are those employing up to 50 employees. For plan years beginning in 2016, the Affordable Care Act (ACA) expands the definition of small employers to include those with up to 100 employees. As groups with 51-100 employees renew or newly purchase coverage, they must abide by the rules and regulations governing the small group market, including those ...

The present work studies the optimal insurance policy offered by an insurer adopting a proportional premiumprinciple to an insuredwhose decision-making behavior ismodeled by Kahneman and Tversky’s Cumulative Prospect Theory with convex probability distortions. We show that, under a fixed premium rate, the optimal insurance policy is a generalized insurance layer (that is, either an insurance la...