| Title: |
Shadow Insurance |
| Authors: |
Ralph S. J. Koijen; Motohiro Yogo; Jel Classification G |
| Contributors: |
The Pennsylvania State University CiteSeerX Archives |
| Source: |
https://minneapolisfed.org/research/sr/sr505.pdf. |
| Publication Year: |
2015 |
| Collection: |
CiteSeerX |
| Subject Terms: |
Capital regulation; Demand estimation; Life insurance industry; Regulatory arbitrage; Reinsurance |
| Description: |
__________________________________________________________________________________ Liabilities ceded by life insurers to shadow reinsurers (i.e., less regulated and unrated off-balance-sheet entities) grew from $11 billion in 2002 to $364 billion in 2012. Life insurers using shadow insurance, which capture half of the market share, ceded 25 cents of every dollar insured to shadow reinsurers in 2012, up from 2 cents in 2002. Our adjustment for shadow insurance reduces risk-based capital by 53 percentage points (or 3 rating notches) and increases default probabilities by a factor of 3.5. We develop a structural model of the life insurance industry and estimate the impact of current policy proposals to limit or eliminate shadow insurance. In the counterfactual without shadow insurance, the average company us-ing shadow insurance would raise prices by 10 to 21 percent, and annual life insurance underwritten |
| Document Type: |
text |
| File Description: |
application/pdf |
| Language: |
English |
| Relation: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.698.6607 |
| Availability: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.698.6607 |
| Rights: |
Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: |
edsbas.AF629012 |
| Database: |
BASE |