Insurance and finance: Competition and/or convergence

Issue title: The Interplay between Finance and Actuarial Science

Article type: Research Article

Authors: Tapiero, Charles S.

Affiliations: Topfer Chair Distinguished Professor of Financial Engineering and Technology Management, Department of Finance and Risk Engineering, New York University Polytechnic Institute, Brooklyn, New York, NY, USA. E-mail: ctapiero@poly.edu

Abstract: This paper discusses facets of the insurance–finance convergence and their competition. Differences and similarities are emphasized and examples are used to highlight their approaches to pricing. We emphasize situations that are particular to the insurance world, such as non normal risks, catastrophic risks, contagions, and other situations where risks are not easily defined. Some questions relating to the efficiency of portfolio securitization are also raised in light of the latent and macroeconomic risks that have pervaded insurance and financial insurance portfolios during the financial crisis.

Keywords: Insurance, pricing, convergence, credit derivatives

DOI: 10.3233/RDA-2011-0050

Journal: Risk and Decision Analysis, vol. 3, no. 1-2, pp. 19-35, 2012