Insurance with undiversifiable risk: Contract structure and organizational form of insurance firms.

摘要: Previous explanations of the contract choice and organizational form insurance firms do not explain, by themselves, recent proliferation mutuals new designs. We first present risk-bearing arguments to address these phenomena. two forms insurance. The is a conventional transfer risk whereas second decomposes between idiosyncratic nonidiosyncratic. show that latter leads more active trade in markets with correlated exposures. Moreover, decomposed dominates simple transfer. These results qualify extend work Borch (1962) Marshall (1974). Market responses “liability crisis” are compatible predictions.