Corporate Insurance Design with Multiple Risks and Moral Hazard

18 Pages Posted: 20 Jun 2009

See all articles by Christian Laux

Christian Laux

Vienna University of Economics and Business; Vienna Graduate School of Finance (VGSF); European Corporate Governance Institute (ECGI)

Date Written: May, 24 2009

Abstract

The paper provides novel insights on the effect of a firm's risk management objective on the optimal design of risk transfer instruments. I analyze the interrelation between the structure of the optimal insurance contract and the firm's objective to minimize the required equity it has to hold to accommodate losses in the presence of multiple risks and moral hazard. In contrast to the case of risk aversion and moral hazard, the optimal insurance contract involves a joint deductible on aggregate losses in the present setting.

Keywords: G22, D82

JEL Classification: multiline insurance, umbrella policies, integrated risk management, deductible insurance

Suggested Citation

Laux, Christian, Corporate Insurance Design with Multiple Risks and Moral Hazard (May, 24 2009). Available at SSRN: https://ssrn.com/abstract=1409357 or http://dx.doi.org/10.2139/ssrn.1409357

Christian Laux (Contact Author)

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Vienna Graduate School of Finance (VGSF) ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
119
Abstract Views
1,355
Rank
422,437
PlumX Metrics