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A simple insurance model: optimal coverage and deductible

Author

Listed:
  • Christopher Gaffney

    (Rutgers Center for Operations Research)

  • Adi Ben-Israel

    (Rutgers Center for Operations Research and School of Business)

Abstract

An insurance model, with realistic assumptions about coverage, deductible and premium, is studied. Insurance is shown to decrease the variance of the cost to the insured, but increase the expected cost, a tradeoff that places our model in the Markowitz mean-variance model.

Suggested Citation

  • Christopher Gaffney & Adi Ben-Israel, 2016. "A simple insurance model: optimal coverage and deductible," Annals of Operations Research, Springer, vol. 237(1), pages 263-279, February.
    • Handle: RePEc:spr:annopr:v:237:y:2016:i:1:d:10.1007_s10479-013-1469-2
    DOI: 10.1007/s10479-013-1469-2
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    References listed on IDEAS

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    Cited by:

    1. Yinping You & Xiaohu Li & Rui Fang, 2021. "On coverage limits and deductibles for SAI loss severities," Annals of Operations Research, Springer, vol. 297(1), pages 341-357, February.

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