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When Insurers Go Bust

When Insurers Go Bust


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About the Book

In the 1990s, large insurance companies failed in virtually every major market, prompting a fierce and ongoing debate about how to better protect policyholders. Drawing lessons from the failures of four insurance companies, When Insurers Go Bust dramatically advances this debate by arguing that the current approach to insurance regulation should be replaced with mechanisms that replicate the governance of non-financial firms.

Rather than immediately addressing the minutiae of supervision, Guillaume Plantin and Jean-Charles Rochet first identify a fundamental economic rationale for supervising the solvency of insurance companies: policyholders are the bankers of insurance companies. But because policyholders are too dispersed to effectively monitor insurers, it might be efficient to delegate monitoring to an institution--a prudential authority. Applying recent developments in corporate finance theory and the economic theory of organizations, the authors describe in practical terms how such authorities could be created and given the incentives to behave exactly like bankers behave toward borrowers, as tough claimholders.


About the Author: Guillaume Plantin is Assistant Professor of Finance at London Business School. He is the coauthor of Théorie du Risque et Réassurance. Jean-Charles Rochet is Professor of Mathematics and Economics at the University of Toulouse and a visiting professor of finance at the London School of Economics and Political Science. He is the coauthor of Microeconomics of Banking.


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Product Details
  • ISBN-13: 9780691129358
  • Publisher: Princeton University Press
  • Publisher Imprint: Princeton University Press
  • Depth: 17
  • Language: English
  • Returnable: Y
  • Spine Width: 15 mm
  • Weight: 326 gr
  • ISBN-10: 0691129355
  • Publisher Date: 01 Jan 2007
  • Binding: Hardback
  • Height: 223 mm
  • No of Pages: 112
  • Series Title: English
  • Sub Title: An Economic Analysis of the Role and Design of Prudential Regulation
  • Width: 146 mm


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When Insurers Go Bust
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When Insurers Go Bust
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