Abstract
This paper examines the response of managers of property-casualty insures to the differential costs and benefits of understanding the liability for outstanding claim losses. The primary hypothesis is that the incentive to underestimate the liability is a decreasing function of the insurer's actual financial position. Empirical tests suggest that managers of financially weak insurers bias downward their estimates of claim loss reserves relative to other insurers after controlling for exogenous economic factors. Evidence also reveals that managers of insurers ‘close’ to receiving regulatory attention understate reserve estimates to an even larger degree.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.