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The Demand for insurance with an upper limit on coverage

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MAP20071505449
Cummins, J. David
The Demand for insurance with an upper limit on coverage / J. David Cummins, Olivier Mahul
The demand for insurance is examined when the indemnity schedule is subject to an upper limit. The optimal contract is shown to display full insurance above a deductible up to the cap. Some result derived in the standard model with no upper limit on coverage turn out to be invalid; the optimal deductible of an actuarially fair policy is positive and insurance may be a normal good under decreasing absolute risk aversion. An increase in the upper limit would induce the policyholders with constant absolute risk aversion to reduce his or her optimal deductible and therefore this would increase the demand for insurance against small losses
En: The Journal of risk and insurance. - Orlando. - Volume 71, number 1, March 2004 ; p. 213-251
1. Coberturas . 2. Contrato de seguro . 3. Matemática del seguro . 4. Demanda de seguros . I. Mahul, Olivier . II. Title. III. Título: The Journal of risk and insurance.