Control of insurance systems with delayed profit/loss sharing feedback and persisting unpredicted claims

Abstract

In an earlier introductory paper (J.I.A.107, 513), Balzer and Benjamin (1980) presented a model of an insurance system with delayed profit/loss sharing feedback from insurer to insured. The system was considered from a general control and dynamic systems theory viewpoint. Certain fundamental concepts were introduced and the dynamic responses of cash flow f(k) and accumulated cash flow fa(k) to an isolated group of unpredicted claims presented. This paper takes the analysis further in a number of important ways.The general structure and details of the mode1 of the insurance system can be found in the earlier paper.