Risk and Return For Property-Casualty Insurers, [Review of Paper]

Some of the important problems of actuarial science lie also within the bounds of financial theory. The individual's and corporation's decision on the proper amount of insurance to buy can be viewed a sub-problem of the overall issue of how economic risk, insurable or not, should be handled. The emergence of the discipline of corporate risk management shows that it is anachronistic to view the insurance problem separately from other financial decisions. As actuaries we must carefully examine the underlying assumptions, the empirical validity and the resulting implications of applying financial theory to insurance problems.