Journal article
Property-Liability Insurer Reserve Error: Motive, Manipulation, or Mistake
The Journal of risk and insurance, Vol.79(2), pp.351-380
06/2012
DOI: 10.1111/j.1539-6975.2011.01434.x
Abstract
We use two reserve error definitions found in the literature to investigate the joint impact of previously studied incentives on the magnitude of reserve error. We find many prior conclusions are dependent upon the restricted setting in which the hypotheses are tested and on the definition of the reserve error. We find strong evidence that financially weak insurers underreserve to a greater extent than other insurers. However, our evidence casts doubt on the conclusion that insurers manipulate reserves to avoid solvency monitoring. We also find insurers increase reserves for tax purposes and to reduce the impact of regulatory rate suppression.
Details
- Title: Subtitle
- Property-Liability Insurer Reserve Error: Motive, Manipulation, or Mistake
- Creators
- Martin F. Grace - Georgia State UniversityJ. Tyler Leverty - Univ Iowa, Iowa City, IA 52242 USA
- Resource Type
- Journal article
- Publication Details
- The Journal of risk and insurance, Vol.79(2), pp.351-380
- DOI
- 10.1111/j.1539-6975.2011.01434.x
- ISSN
- 0022-4367
- eISSN
- 1539-6975
- Publisher
- Wiley
- Number of pages
- 30
- Language
- English
- Date published
- 06/2012
- Academic Unit
- Finance
- Record Identifier
- 9984700654202771
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