K.U.Leuven - Departement Toegepaste Economische Wetenschappen
DTEW Research Report 9740 pages:1-16
A premium principle is an economic decision rule used by the insurer in order to determine the amount of the net premium for each risk in his portfolio. In this paper we investigate the problem of determining the premium principle to be used. First, we discuss some desirable properties of a premium principle. We prove that the only premium principles that possess these properties belong to a class of premium principles introduced by Wang (1996). Similar results ccan be found in Wang, Young & Panjer (1997)..