Financial Risk Management by Insurers: An Analysis of the Process

J. OF RISK AND INSURANCE, Vol. 64 No. 2, June 1997

Posted: 2 Sep 1997

See all articles by Anthony M. Santomero

Anthony M. Santomero

University of Pennsylvania - The Wharton School

David F. Babbel

University of Pennsylvania - The Wharton School - Finance and Insurance Departments; CRA International

Abstract

On-site visits to financial service firms were conducted to review and evaluate their risk management systems. In the insurance sector, this evaluation covered prominent life/health and property-liability insurers, both in the United States and abroad. The information obtained covered both the philosophy and the practice of financial risk management. This article outlines the results of this investigation. It reports the state of risk management techniques in the industry. It reports the standard of practice and evaluates how and why it is conducted in the particular way chosen. In addition, critiques are offered where appropriate. We discuss the problems which the industry finds most difficult to address, shortcomings of the current methodology used to analyze risk, and the elements that are missing in the current procedures of risk management.

JEL Classification: G20

Suggested Citation

Santomero, Anthony M. and Babbel, David F., Financial Risk Management by Insurers: An Analysis of the Process. J. OF RISK AND INSURANCE, Vol. 64 No. 2, June 1997. Available at SSRN: https://ssrn.com/abstract=11113

Anthony M. Santomero (Contact Author)

University of Pennsylvania - The Wharton School

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

David F. Babbel

University of Pennsylvania - The Wharton School - Finance and Insurance Departments ( email )

215 Wakefield Road
Bryn Mawr, PA 19010
United States
610-527-1839 (Phone)

CRA International ( email )

John Hancock Tower
200 Clarendon Street, T-33
Boston, MA 02116-5092
United States
610-527-1839 (Phone)

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