Physical Sciences and Mathematics Commons^™

Optimal Deductibles: A Theoretical Analysis From An Insured's Perspective, Alexander Kreienbring

Theses and Dissertations

A stop-loss policy as a tool for protection against a large loss is one of the most common insurance forms. For fixed premiums and therefore a uniquely determined insurance deductible, it has been well-established that the stop-loss form is superior to all other common

insurance forms (Arrow, 1963). Using the expected premium principal, one can relax the assumption of a fixed premium and allow the insured to choose an arbitrary deductible that fits their needs.

This thesis presents a stop-loss insurance policy model from an insured's perspective for a flexible premium. It shows the existence and uniqueness of an optimal …