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Can Insurance Companies Control their Financial Stability? Practical Solutions

Author

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  • Cristea, Mirela

Abstract

Taking into account the actual economic situation of the world with numerous financial crisis, the insurance companies should control their financial stability in order to avoid the insolvency or even bankruptcy state. Thus, the insurers should find the adequate methods of substantiating the premium installments, the adequate ways of attracting insurances in order to achieve the right structure of the portfolio and the desired level of financial stability within the company. The present paper proposes mathematical calculation, through which different solution may be given in order to optimize insurance portfolio, determining thus its adequate structure to a certain level of stability planned by the company. The result of elaborated studies and analysis represents an useful instrument for the insured persons, being able to choose the right type of insurance, resting on its comparisons, analysis and conclusions, and for the insurance companies, being meant to improve their subscription and investment activity, as well as the financial stability. The mathematical calculation shown within this paper may be applied in practice and improved.

Suggested Citation

  • Cristea, Mirela, 2008. "Can Insurance Companies Control their Financial Stability? Practical Solutions," MPRA Paper 10052, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10052
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    File URL: https://mpra.ub.uni-muenchen.de/10052/1/MPRA_paper_10052.pdf
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    References listed on IDEAS

    as
    1. Gerald Krenn & Mario Oschischnig, 2003. "Systemic Risk Factors in the Insurance Industry and Methods for Risk Assessment," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 6, pages 62-74.
    2. repec:onb:oenbwp:y:2003:i:6:b:1 is not listed on IDEAS
    3. Michael Butt, 2007. "Insurance, Finance, Solvency II and Financial Market Interaction," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 32(1), pages 42-45, January.
    4. Thomas Schubert & Gundula Grießmann, 2007. "German Proposal for a Standard Approach for Solvency II," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 32(1), pages 133-150, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    insurance; financial stability; optimize subscription portfolio; mathematical calculation;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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