Abstract
In the literature on optimal indemnity schedules, indemnities are usually restricted to be non-negative. Keeler [1974] and Gollier [1987] show that this constraint might well bind: insured could get higher expected utility if insurance contracts would allow payments from the insured to the insurer at some losses. This paper extends Collier's findings by allowing for negative indemnity payments for a broader class of insurers' cost functions and argues that the indemnity schedule derived here is more appropriate for practical applications (e.g. in health insurance).
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Breuer, M. Optimal insurance contracts without the non-negativity constraint on indemnities: revisited. Geneva Risk Insur Rev 31, 5–9 (2006). https://doi.org/10.1007/s10713-006-9463-0
Received:
Revised:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10713-006-9463-0