th This book is published to commemorate the 50 Anniversary of the S.S. Huebner Foundation for Insurance Education. Administered at the Wharton School of the University of Pennsylvania, the Huebner Foundation was established in 1941 to strengthen insurance education at the collegiate level by increasing the number of professors specializing in insurance and enriching the literature in the field. The financial support of leading life insurance companies has enabled the Foundation to provide post-graduate education for prospective insurance teachers and scholars. Through its fellowship program, the Foundation supports students in the Ph.D. program in Risk and Insurance at the Wharton School. The success of the Foundation is measured by the accomplishments of its alumni. Former Huebner Fellows play leading roles in every major area of insurance education. Fellows teach insurance to tens of thousands of undergraduate and MBA students each year and have written hundreds of books and thousands of articles on insurance. Fellows hold leadership positions at the American College, the Life Office Management Association, and the Certified Employee Benefit Specialist Program. The Foundation was created in honor of Dr. Solomon S. Huebner, a pioneer in insurance education. Dr. Huebner taught the first organized course on the economics of insurance ever offered at the collegiate level in 1904. An internationally recognized author and teacher, Dr. Huebner had a profound impact on both insurance education and the insurance industry. He served on the faculty of the Wharton School for more than nearly fifty years.

Risk Analysis in Finance and Insurance, Second Edition presents an accessible yet comprehensive introduction to the main concepts and methods that transform risk management into a quantitative science. Taking into account the interdisciplinary nature of risk analysis, the author discusses many important ideas from mathematics, finance, and actuarial science in a simplified manner. He explores the interconnections among these disciplines and encourages readers toward further study of the subject. This edition continues to study risks associated with financial and insurance contracts, using an approach that estimates the value of future payments based on current financial, insurance, and other information. New to the Second Edition Expanded section on the foundations of probability and stochastic analysis Coverage of new topics, including financial markets with stochastic volatility, risk measures, risk-adjusted performance measures, and equity-linked insurance More worked examples and problems Reorganized and expanded, this updated book illustrates how to use quantitative methods of stochastic analysis in modern financial mathematics. These methods can be naturally extended and applied in actuarial science, thus leading to unified methods of risk analysis and management.

This book addresses an experiment in funding money damage claims in England from 2000 to 2013. The model - recoverable conditional fees - was unique and has remained so. It covers the development, amendment and effective abolition of the model, as well as the process of policy development and the motivation and objectives of the policy makers.

The Geneva Association and Risk Economics The Geneva Association The Geneva Association (International Association for the Study of Insurance Economics) commenced its activities in June 1973, on the initiative of twenty-two members in eight European countries. It now has fifty-four members in sixteen countries in Europe and in the United States. The members of the association are insurance companies which provide financial support for its activities. The aims and strategy of the Geneva Association were clearly defined in 1971 by the founding committee. They were set forth in the first report to the Assembly of Members in 1974: "To make an original contribution to the progress of insurance by objective studies on the interdependence between economics and insurance." In pursuit of this objective, the Association strives to place insurance problems in the context of the modern economy and to overcome the antagonism between different groups and institutions by showing that they all have a common interest in tackling the problem of risk in a changing world. In consequence, the studies made by the Association had to move away from the subjects familiar to insurance professionals and explore related fields, dealing with opinions and behavior falling outside the profession's vii FOREWORD viii traditional framework of analysis. It is in this direction that the Association's preoccupations have been directed from the beginning, towards areas in which insurance activities come into contact with those of other economic sectors such as government, banking, manufacturing, and households.

Two different applications have been considered, automobile claims from Massachusetts and health expenses from the Netherlands. We have fit 11 different distributions to these data. The distributions are conveniently nested within a single four parameter distribution, the generalized beta of the second type. This relationship facilitates analysis and comparisons. In both cases the GB2 provided the best fit and the Burr 3 is the best three parameter model. In the case of automobile claims, the flexibility of the GB2 provides a statistically siE;nificant improvement in fit over all other models. In the case of Dutch health expenses the improvement of the GB2 relative to several alternatives was not statistically significant. * The author appreciates the research assistance of Mark Bean, Young Yong Kim and Steve White. The data used were provided by Richard Derrig of The Massachusetts Automobile Rating and Accident Prevention Bureau and by Bob Van der Laan and The Silver Cross Foundation for the medical insurance claim data. 2~ REFERENCES Arnold, B. C. 1983. Pareto Distributions. Bartonsville: International Cooperative Publishing House. Cummins, J. D. and L. R. Freifelder. 1978. A comparative analysis of alternative maximum probable yearly aggregate loss estimators. Journal of Risk and Insurance 45:27-52. *Cummins, J. D., G. Dionne, and L. Maistre. 1987. Application of the GB2 family of distributions in collective risk theory. University of Pennsylvania: Mimeographed manuscript. Hogg, R. V. and S. A. Klugman. 1983. On the estimation of long tailed skewed distributions with actuarial applications.

This series explores the central and unique role of organizational ethics in creating and sustaining a flourishing, pluralistic, free enterprise economy. It examines how profit seeking and not-for-profit organizations can be conceived and designed to satisfy legitimate human needs in an ethical and meaningful way. The authors submit rigorous research studies from a wide variety of academic perspectives including: business management, philosophy, sociology, psychology, religion, accounting, finance, and marketing. It focuses on ethical issues in the insurance industry and includes a variety of disciplines with authors from over 30 countries. The papers were selected from the best presentations at the Twelfth Annual International Conference Promoting Business Ethics, held Oct. 2005 in Manhattan.

Provides a comprehensive and accessible introduction to general insurance pricing, based on the author’s many years of experience as both a teacher and practitioner. Suitable for students taking a course in general insurance pricing, notably if they are studying to become an actuary through the UK Institute of Actuaries exams. No other title quite like this on the market that is perfect for teaching/study, and is also an excellent guide for practitioners.

Most insurers around the world have introduced some form of merit-rating in automobile third party liability insurance. Such systems, penalizing at-fault accidents by premium surcharges and rewarding claim-free years by discounts, are called bonus-malus systems (BMS) in Europe and Asia. With the current deregulation trends that concern most insurance markets around the world, many companies will need to develop their own BMS. The main objective of the book is to provide them models to design BMS that meet their objectives. Part I of the book contains an overall presentation of the pros and cons of merit-rating, a case study and a review of the different probability distributions that can be used to model the number of claims in an automobile portfolio. In Part II, 30 systems from 22 different countries, are evaluated and ranked according to their toughness' towards policyholders. Four tools are created to evaluate that toughness and provide a tentative classification of all systems. Then, factor analysis is used to aggregate and summarize the data, and provide a final ranking of all systems. Part III is an up-to-date review of all the probability models that have been proposed for the design of an optimal BMS. The application of these models would enable the reader to devise the system that is ideally suited to the behavior of the policyholders of his own insurance company. Finally, Part IV analyses an alternative to BMS; the introduction of a policy with a deductible.

Stochastic Processes for Insurance and Finance offers a thorough yet accessible reference for researchers and practitioners of insurance mathematics. Building on recent and rapid developments in applied probability the authors describe in general terms models based on Markov processes, martingales and various types of point processes. Discussing frequently asked insurance questions, the authors present a coherent overview of the subject and specifically address:

• the principal concepts of insurance and finance
• practical examples with real life data
• numerical and algorithmic procedures essential for modern insurance practices

From the reviews: "The highly esteemed 1990 first edition of this book now appears in a much expanded second edition. The difference between the first two English editions is entirely due to the addition of numerous exercises. The result is a truly excellent book, balancing ideally between theory and practice. ....As already hinted at above, this book provides the ideal bridge between the classical (deterministic) life insurance theory and the emerging dynamic models based on stochastic processes and the modern theory of finance. The structure of the bridge is very solid, though at the same time pleasant to walk along. I have no doubt that Gerber's book will become the standard text for many years to come. Metrika, 44, 1996, 2

This book explores theoretical and practical implications of reflecting the fair value of liabilities for insurance companies. In addition, the contributions discuss the disclosure of these values to the financial and regulatory communities and auditing firms which are actually calculating this illusive but important variable. It combines contributions by distinguished practitioners from the insurance, accounting and finance fields, with those of prominent academics. One of the central themes of the collection is that adequate disclosure of the true economic value of insurance company liabilities is both possible and desirable. Wherever possible, the insurance valuation process is wedded with modern financial theory. For example, the use of option pricing theory is applied to insurance companies, where the true value of the firm's liabilities is a critical variable. Methods such as cash flow, earned profit and indirect discount are explored.

Insurance is affordable protection for ourselves, our loved ones, and our belongings. As most people maintain some kind of insurance, it is also an extremely lucrative industry, generating billions of dollars annually. Investigative reporter Kenneth D. Meyers thinks that the profits have turned the insurance industry into a bad business.
In False Security, Myers chronicles numerous untold abuses of the insurance industry-exposing the inside story of bad investments, naive executives, bilked clients, collapsed companies, and staggering financial losses. He paints a frightening picture of greed, incompetence, and corruption that rivals the savings and loan scandal in scope. Myers reveals how insurance executives jeopardized their companies by trying to price gouge the competition out of business, only to go under themselves. Myers writes of the many hostile takeovers, the extravagant use of stolen profits, the many tax "safe havens," squandering millions of dollars by executives who failed at one company after another.
The result of thousands of hours of investigation and many interviews, False Security outlines never-before-reported details of greed, and corruption gathered from state and federal prosecutors, industry officials, and the criminals themselves, some in prison and others free and now involved in other questionable enterprises, many of whom will be familiar from the savings and loan scandal.

Using institutional theory to explain innovation and merging academic and critical analysis with practical recommendations, this book provides a full and rich account of how new products are brought to market; considering both the successes and failures in equal measure.

The book takes the meeting point of two seemingly incongruous schools of theoretical thought to enlighten the debate surrounding product innovation. In doing so it:

• illustrates how institutional forces come to shape the interest, priorities and behaviour of organizational members in the development and implementation process of incremental product innovation
• investigates the failed innovative attempts of established organizations
• demonstrates the importance of organizational and intra-organizational forces for innovative success.

The insight it offers into the organization of product innovation processes in the financial services sector and the guidelines it sets up for their improvement makes Innovation and Institutions essential reading for those working in or studying the banking, finance and insurance sector who have an interest in innovation studies.

This new book uses advanced signal processing technology to measure and analyze risk phenomena of the financial markets. It explains how to scientifically measure, analyze and manage non-stationarity and long-term time dependence (long memory) of financial market returns. It studies, in particular, financial crises in persistent financial markets, such as stock, bond and real estate market, and turbulence in antipersistent financial markets, such as anchor currency markets. It uses Windowed Fourier and Wavelet Multiresolution Analysis to measure the degrees of persistence of these complex markets, by computing monofractal Hurst exponents and multifractal singularity spectra. It explains how and why financial crises and financial turbulence may occur in the various markets and why we may have to reconsider the current wave of term structure modeling based on affine models. It also uses these persistence measurements to improve the financial risk management of global investment funds, via numerical simulations of the nonlinear diffusion equations describing the underlying high frequency dynamic pricing processes.

Major challenges for life insurance companies have been posed by an unprecedented wave of mergers and acquisitions in the insurance industry and the emergence of non-traditional competitors such as banks, mutual fund companies and investment advisory firms. This is the first book to analyze the determinants of firm performance in the life insurance industry by identifying the best practices' employed by leading insurers to succeed in this dynamic business environment. The book draws upon data from insurer financial statements as well as upon an extensive survey of life insurer management practices and strategic choices in distribution systems, information technology, mergers and acquisitions, human resources and financial strategies. Generic strategies such as cost leadership, customer focus, and product differentiation are analyzed as well as strategic practices specific to the insurance industry. Best practices are identified by measuring the economic efficiency of insurers and by comparing firms across the industry. Both cost and revenue efficiency are measured relative to best practice efficient frontiers consisting of the industry's dominant life insurance firms. Economies of scale and the effects of mergers and acquisitions on efficiency are also analyzed. Financial strategies are examined with specific reference to pricing policy, valuation of assets and liabilities, and the current state of firm-level risk management systems. The benchmarks established are the result of extensive fieldwork that identifies key financial risks and methodologies to both measure and manage them at the firm level. The results discussed in the book indicate that firm performance is significantly correlated with management practices and strategic choices. Thus, life insurers can improve profitability by adopting optimal combinations of strategies. The book contains important new material on the effects of strategic choices in product distribution systems, information technology, mergers and acquisitions, human resources, and financial risk management policies. In the area of efficiency, the methodology provides a new approach for identifying peer groups of insurers and measuring the performance of individual insurers relative to their peer group. On the topics of risk and pricing, new insights are offered relative to current methodologies and in regard to areas where improvement is clearly warranted. The book concludes with an analysis of the future opportunities and challenges in the life insurance industry facing managers, and the strategic options available to them to cope with these changes.

First Published in 2005. This book is an attempt by a layman to explain to other laymen the purposes and processes of industrial assurance, an institution which exercises a far-reaching influence upon the life of the community, and in which for that reason the community, through its political organs of Parliament and administration, has long taken an inquisitive, critical, and entirely proper interest. This will be of interest to those studying the long experience which will enable its standards to be still further raised and those vested in its professional practitioners.

Insurance companies, as well as banks and thrift institutions, have traditionally reported assets and liabilities on the basis of their amortized cost, or book value. But following the turmoil in securities markets due to highly volatile interest rate fluctuations in the 1980s and the early 1990s, and problems caused by inadequate liquidity, in the mid-1990s the Financial Accounting Standards Board (FASB) issued a new ruling calling for financial intermediaries to report the fair, or market, value of most assets. Called FAS 115, this new standard is the first step in the eventual change to valuing all the assets and liabilities belonging to financial intermediaries under the fair value accounting method. Thus, these changes will pose tremendous future implications for three key business measures of a financial intermediary: Solvency: if the fair values of assets and liabilities are out-of-step, then healthy companies may report negative net worth and insolvent companies may appear to be in sound financial condition. Reported Earnings: if the fair values of assets and liabilities are out of step, then reported earnings will not accurately represent the financial operations of the company. Risk Management: FASB recently postponed the implementation of its new rules on accounting for the use of derivatives instruments. However, if the final set of rules for figuring the fair value of derivatives is not carefully crafted, it may be possible that companies prudently hedging their risks are subject to penalties in their financial reports, while companies taking greater risks appear to have less volatile financial performance. Compared to banks and other financial intermediaries, life insurance companies have the longest term and most complex liabilities, and hence the new FASB requirement poses the most severe challenges to the life insurance industry. The lessons learned from the debate among life insurance academics and professionals about how respond to the fair value reporting rule will be instructive to their counterparts in other sectors of the insurance industry, as well as those involved with other financial institutions. Of particular note are the two papers which comprise Part III. The first provides examples of the fair valuing of annuity contracts, while the second offers examples of the fair valuing of term insurance products. As the papers collected in The Fair Value of Insurance Business extend and update some of the issues treated in a previous Salomon Center conference volume, The Fair Value of Insurance Liabilities, this new volume may be viewed as a companion to the earlier book.

Employers Can Reduce Their Employees' Health Care Costs by Thinking Out of The BoxEmployee health care costs have skyrocketed, especially for small business owners. But employers have options that medical entrepreneurs have crafted to provide all businesses with plans to improve their employees' wellness and reduce their costs. Thus, the cost of employee health care benefits can be reduced markedly by choosing one of numerous alternatives to traditional indemnity policies. The Finance of Health Care provides business decision makers with the information they need to match the optimal health care plan with the culture of their workforce. This book is a must guide for corporate executives and entrepreneurs who want to attract-and keep--the best employees in our competitive economy.

Until a few years ago I concentrated my attention on workers' compensa tion programs in the United States and Canada. Because the United States has 52 programs and Canada has eight, I was exposed to a diversity of approaches that caused me to believe that few other approaches existed. Since 1984 I have become more aware of what the rest of the world has been doing and discovered that my knowledge needed to be broadened significantly. The trigger action was a 1984 faculty research exchange agreement between Keio University in Tokyo and the University of Minnesota that made it possible for me to spend much of my time studying Japan's workers' compensation program and comparing it with the United States approaches. Japan's program had several features that I had not encountered in the United States or Canada. After this experience I attached considerably more value to and spent more time studying the Social Security Administration's biennial reports on Social Security Pro grams Throughout The World, which include workers' compensation programs. I also presented papers at two meetings of the International Insurance Society based on my Japanese and Social Security Adminis tration report research. Many participants urged further study in this area and offered to send me materials describing their nations' programs. The result is this study which I hope that readers will find interesting and worthwhile."

Orio Giarini The "Geneva Association" (International Association for the Study of Risk and Insurance Economics) was founded in 1973. The main goal was to stimulate and organize objective research in the field of risk, uncertainty, and insurance, in a world in which such issues were clearly becoming of greater and greater relevance for all economic actors. This was a pioneer ing effort, especially as economic theory and the teaching of economics were still anchored to the key notion of general equilibrium under an assumption of certainty. Thus, we had to start our work almost from scratch. One of the first initiatives was to bring together in Geneva, in June of 1973, all the academics in Europe already involved in risk and insurance economics. We found eight from five different countries who never had met before. This seminar chaired by Raymond Barre, the first president of The Geneva Association, was the first of an annual series that became known as the seminar of "The European Group of Risk and Insurance Economists." Since then more than 100 economists from most European countries as well as participants from two other continents and in particular from the United States have taken part in this seminar."

This new book uses advanced signal processing technology to measure and analyze risk phenomena of the financial markets. It explains how to scientifically measure, analyze and manage non-stationarity and long-term time dependence (long memory) of financial market returns. It studies, in particular, financial crises in persistent financial markets, such as stock, bond and real estate market, and turbulence in antipersistent financial markets, such as anchor currency markets. It uses Windowed Fourier and Wavelet Multiresolution Analysis to measure the degrees of persistence of these complex markets, by computing monofractal Hurst exponents and multifractal singularity spectra. It explains how and why financial crises and financial turbulence may occur in the various markets and why we may have to reconsider the current wave of term structure modeling based on affine models. It also uses these persistence measurements to improve the financial risk management of global investment funds, via numerical simulations of the nonlinear diffusion equations describing the underlying high frequency dynamic pricing processes.

Providing a comprehensive review of the main issues facing the management of insurance enterprises, 19 authors have collaborated to give an international perspective in areas such as strategy, corporate planning, organizations and staffing, costing, underwriting and premium rating, marketing, reserving and investment, profit analysis and regulation.;This book aims to be of interest to the management of insurance companies and brokers, those undertaking continuing professional education in insurance as well as students studying insurance subjects as part of postgraduate and undergraduate degrees.