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OPTIMAL INSURANCE CONTRACT DESIGN FOR INSURANCE GUARANTEE SCHEME

The Indonesian insurance industry is still relatively small when measured as a percentage of GDP while the average firm is too small, heightening the risk of insolvency for both individual companies and the industry as a whole. The Indonesian government plans to roll out an insurance guarantee program in 2028 to reduce insolvency risk in the industry and improve the robustness of insurance firms. This programme cannot directly replicate any international models due to the peculiarities of the Indonesian insurance industry.

This thesis models an insurance guarantee scheme with three parties involved; policyholder, insurance company, and insurance guarantee provider. The goal is to create the pareto-optimal insurance guarantee scheme by maximising the utility received by all the parties involved, subject to some constraints. This reflects the regulator's aim to reduce insolvency risk at a systemic level. The set of constraints present an optimal contract form for an insurance guarantee policy and under the expected value-premium principle. Numerical analysis is included for ease of interpretation.

The model of the insurance guarantee contract here can assist Indonesian regulators in developing the insurance guarantee program planned for 2028. This optimal insurance and insurance guarantee contract that are generated in this study assumes a three-party model with constraints that better reflect the Indonesian insurance industry.

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300077827782RLC MM (Rak Tesis)Available
Detail Information
Series Title
-
Statement of Responsibility
Call Number
7782
Publisher
Salemba, Jakarta : Magister Manajemen FEB UI.,
Collation
x, 38 p. : ill. ; 30 cm.
Language
English
ISBN/ISSN
-
Classification
650
Content Type
-
Edition
-
Subject(s)
Tesis
Manajemen Aktuaria
Value at Risk
Insurance Contract Design
Insurance Contract
Pareto Optimality
Insurance Guarantee Scheme
Insurance Guarantee Program
Specific Detail Info
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