on CAPM model for insurance ratemaking
zhangg@towers.com
Fri, 6 Mar 1998 10:43:53 -0500
I am confused by the CAPM model for insurance ratemaking in Chapter 8
of
"Foundations of C. A. S.". If other terms stay same, then the
underwriting profit
margin increases as the return from the market increases according to
this model.
It's my understanding that if an insurance company can make more money
from stock
and bonds, then they will be required to charge less in underwriting
portion. I think
that's also the point the author tries to say in this Chapter.
Can anyone help me on this? Thanks