This article revisits the economics of insurance using insights from derivatives pricing and hedging. Applying this perspective, I emphasize the following insights applicable to insurance. First, I provide a valid justification for the use of arbitrage-free insurance premiums. This justification applies in both complete and incomplete markets. Second, I demonstrate the importance of diversifiable idiosyncratic risk for the determination of insurance premiums. And third, analyzing the insurance industry using the functional approach, I show the importance of derivatives and the synthetic construction of derivatives for reducing an insurance company's insolvency risk.

中文翻译：

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保险经济学：基于衍生品的方法

本文利用衍生品定价和对冲的见解重新审视保险经济学。运用这一观点，我强调以下适用于保险的见解。首先，我为使用无套利保费提供了一个有效的理由。这一理由适用于完全市场和不完全市场。其次，我证明了可分散的特殊风险对确定保险费的重要性。第三，使用功能方法分析保险业，我展示了衍生品和衍生品的综合构建对于降低保险公司破产风险的重要性。