Special issue of The Geneva Papers in memory of Dr Orio Giarini
Dr Orio Giarini and the Geneva Association
As the founder of the organization, Dr Orio Giarini shaped the initial activities of the Geneva Association (AG) and laid the foundation for the stimulation of academic research in the field of insurance economics to a a time when research in this area was still nascent. In addition to founding the AG, in 1973 he created the European Group of Insurance Economists, which quickly became one of the most renowned academic circles in insurance economics. He has also launched numerous research projects to better understand the economic relevance of insurance, co-founded and edited The Geneva Papers and invited the most famous economists to contribute to the activities of the GA.
To recognize Dr Giarini’s contributions in this field, various researchers and former GA members who knew him well were invited to write articles for a special issue in his memory.
Five tribute articles bear witness to Dr Giarini’s role in shaping the fields of risk and insurance studies.
In her contribution, Mr. Walter Kielholz delves into the history of GA and explains how, under the leadership of Dr. Giarini, she initiated innovative areas of research related to insurance. The successes and failures of the GA are also highlighted. He concludes with the current and future challenges and opportunities for AG and insurance more broadly in today’s changing risk landscape, stressing that research-based dialogue is more important than ever.
Professor Henri Loubergé testifies to the influence of Dr Giarini on his academic career, both as a mentor and as a colleague. He gives an overview of their joint research work and tells stories of his time as Deputy Secretary General of the GA, when he shared an office with Dr Giarini and supported him in the early years of the association. .
By examining Dr Giarini’s work and impact from an academic perspective, Neil Doherty shows how Dr Giarini understood the benefits that academic research could bring to GA and how he encouraged academics to explore new avenues of risk management research. Dr Giarini believed that insurance was only one of the pillars to be used to deal with the risks people face in their lifetime and insisted that other pillars, such as savings, social security and the working environment, should also be studied.
Professor Walter Stahel pays tribute to Dr Giarini as a great intellectual and friend. It presents some of the many scientific collaborations developed by Dr Giarini to better understand the effect of risks on society and insurance against those risks, as well as to recognize the intellectual curiosity and intelligence of Dr Giarini.
Finally, Ms. Geneviève Reday-Mulvey pays tribute to Dr. Giarini and his work on the fourth pillar as a holistic solution to the risk of longevity and to the notion of society against aging. It traces the evolution of the GA’s Four Pillars program and how it has influenced the political and public debate on older people’s income.
Tribute to the intellectual curiosity of Dr Giarini
In addition to the tribute articles, the issue includes seven original research related to insurance or risk, which echoes Dr. Giarini’s research appetite.
Although purchasing reinsurance reduces the risk of insurer insolvency, transferring the risk to reinsurers is costly. Dr. David Cummins, Professor Georges Dionne, Professor Robert Gagné and Mr. Abdelhakim Nouira analyze the costs and benefits of reinsurance in their article. Using a sample of US property and casualty insurers, they show that purchasing reinsurance dramatically increases insurer costs but significantly reduces loss ratio volatility. By purchasing reinsurance, therefore, insurers agree to pay higher insurance production costs to reduce their underwriting risk.
Professor Peter Zweifel’s article embraces Dr Giarini’s tendency to “think outside the box” by proposing a practical way to bridge the gap between risk (where the probabilities of occurrence are fully known) and uncertainty (where these probabilities are unknown). It applies it to an insurance company which plans to launch an innovative product but cannot precisely measure the probability of a favorable reception by the market, that of a competitor launching its own innovation, or the chance of obtaining the success. ‘approval of the regulatory authority. Using linear partial information theory to systematically exploit the existence of imprecise information, he gives advice on the best decision for the insurance company.
Mr. Christian Gollier addresses the important question of how the persistence of habits affects the demand for insurance and risky assets. Faced with the risk of having to reduce their consumption below their usual level in adverse situations, customers should be more risk averse. Using a two-period portfolio choice model, Gollier shows that adding habit persistence can significantly reduce risk aversion through a diversified risk channel over time. This finding runs counter to the popular belief in the literature that habit persistence can solve the equity premium puzzle.
In his article, Mr. Roland Eisen studies vulnerability, a subject very dear to Dr. Giarini. According to Dr Giarini, there are two types of risks associated with vulnerability, man-made and natural, both of which are growing in size and are increasingly interdependent. The paper examines the role of mutual insurance in controlling this vulnerability, particularly addressing the benefits of mutual insurance when risks are significant, probabilities uncertain or unknown, and interrelated or correlated events.
To date, only a few articles in the literature have examined the potential role of foreign direct investment (FDI) in insurance services. This is the subject of the article by Professor Jean-François Outreville. Although the positive impact of FDI on economic growth is a commonly accepted claim, its effects on financial intermediation and the development of financial markets are disputed. He finds that there is too little research on the relationship between FDI and insurance activities to draw firm conclusions, and suggests that further analysis should look into the role of financial institutions in relation to governance, legal frameworks and respect for private sector property rights. investors.
Dr Eric Briys reflects on the intellectual work and interests of Dr Giarini by offering an insightful journey on the themes of insurance, growth and the service economy. The article establishes a link between Dr. Giarini’s ideas and the notions of ergodicity and path dependence, the consequences of which are not yet fully understood in economics. Ergodicity and path dependence are indeed essential when aiming to bring more precision to the soul and more soul to precision, which Dr. Giarini was looking for.
The implications of COVID-19 on insurance investment are at the center of the research article by Mr. Patrick Liedtke. It first examines the impact of the sharp drop in the equity markets on the balance sheet of a typical insurer, then analyzes the effects of dislocations in fixed income securities and the impact of deteriorations on the solvency capital of insurers, and finally, studies alternative investments, with particular emphasis on private markets. The paper highlights the increasing sophistication and complexity of investing for insurers and calls on businesses and regulators to judiciously balance the protection interests of policyholders with the goals of market efficiency. A
Professor Christophe Courbage is editor-in-chief of The Geneva Papers and professor of international risk management at the Geneva School of Business Administration (HES-SO).