Competition among non-life insurers under solvency constraints: A game-theoretic approach

Abstract

We formulate a noncooperative game to model competition for policyholders among non-life insurance companies, taking into account market premium, solvency level, market share and underwriting results. We study Nash equilibria and Stackelberg equilibria for the premium levels, and give numerical illustrations.

Nash equilibria of Over-The-Counter bargaining for insurance risk redistributions: The role of a regulator

“…Therefore, we assume that firms are participating in a simultaneous-move bargaining situation. Dutang, Albrecher, and Loisel (2013) study competition for insurance companies by Nash equilibria. They focus on the competition for policyholders with other insurance companies.…”

Stackelberg Equilibrium Premium Strategies for Push-Pull Competition in a Non-Life Insurance Market with Product Differentiation

“…Market reaction to the individual insurer's premium is considered by Emms (2011). Explicit games between insurance companies have been studied using non-cooperative game theory, where Cournot games involve volume controls, see, e.g., Powers et al (1998), whereas premium controls correspond to Bertrand games, e.g., the one-period games in Polborn (1998) and Dutang et al (2013), who note that one aspect missing in their analysis is adverse selection among policyholders-our analysis includes this. Emms (2012) and Boonen et al (2018) do consider continuous-time differential games in premium controls, but again based on Taylor (1986) type demand functions of own and market average premium.…”

An Extension of One-Period Nash Equilibrium Model in Non-Life Insurance Markets

“…According to Dutang et al in [1], there are two non-cooperative game theory models in insurance markets: the Bertrand oligopoly, where insurers set premiums and Cournot oligopoly, where insurers choose optimal values of insurance coverage. Some extensions of these models have been investigated by various authors (see [1] and references therein). The game theoretic approach has received a great deal of attention by many authors, who contributed in various ways (see [2] [3] [4] and references therein).…”

“…By considering a lapse and an aggregate loss models for policyholders, the Bertrand model of Rees et al (cf. [5]) has been extended in [1]. They showed the suitability of non-cooperative game theory for insurance market modelling.…”