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Title: Valuation of information-sharing in marine mutual insurance
Authors: Li, K
Liu, J
Yan, J
Keywords: Information-sharing
Mutual insurance
P&I Club
Issue Date: 2010
Source: Risk and decision analysis, 2010, v. 2, no. 2, p. 65-74 How to cite?
Journal: Risk and Decision Analysis 
Abstract: With empirical evidence from marine mutual insurance (MMI), an impulse feedback model is constructed to address how information-sharing can help increase the social welfare as well as efficiency of the operation of MMI system. Focusing on information-sharing, this paper considers premium policy optimization of under a mutual insurance system with a homogeneous market of identical members. Our findings confirm that the principle of mutuality can be attained under "equal-risk pooling", but not necessarily under "unequal-risk pooling", and reveal that quantifiable difference exists in valuation of mutuality under the two schemes of risk pooling. It points out that the key to a successful MMI is the equal-risk pooling. Algorithms are developed to compute the value of mutuality by solving the HJB equations and quasi-variational inequalities. The conclusion provides a scientific basis for both managerial strategy and competition regulation. The findings are applicable to a wide range of reserve and inventory management problems.
ISSN: 1569-7371
DOI: 10.3233/RDA-2011-0028
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