Pricing for Systematic Risk

@inproceedings{Schnapp2004PricingFS,
  title={Pricing for Systematic Risk},
  author={Frank Schnapp},
  year={2004}
}
  • Frank Schnapp
  • Published 2004
In recent years, financial methods have emerged as the dominant approach for establishing insurance profit loadings. Financial theory suggests that prices should reflect systematic risk only, with no reward for diversifiable risk. This principle is applied to the pricing of insurance exposures actively traded in a secondary market. The resulting Systematic Risk Pricing Model differs from the Capital Asset Pricing Model in that it determines the price rather than the rate of return for each… CONTINUE READING