The catastrophe bond's current reliance on full collateralization serves as an impediment to deep market penetration, one that can only be overcome by substantial frictional cost
advantages, far beyond those observed in today's marketplace.
As a software company, Peregrine understands that customers experience considerable frictional cost
and operational challenges in integrating software applications and systems.
The frictional cost
savings to ARCT will be approximately $15,000 per property or greater, since the lender is not recording mortgages or conducting property level due diligence.
We have always been very frugal about our facilities spending -- rent is simply a frictional cost
that doesn't directly benefit our members.
The share of frictional cost
in the total cost of insurance ranges anywhere from 5 percent to 40 percent, Landry says.
9) Cummins, Lin, and Phillips (2005) find, on an empirical basis, that the Myers and Read way of allocating the frictional cost
of capital is reflected in the insurance premiums observed.
As a workers' comp insurer, you may be providing essential services to your customers, but you do so at a frictional cost
to these customers.
One frictional cost
is management's unwillingness or inability to make optimal capital investment decisions.
With a more predictable portfolio, a company can raise its per-event retentions and garner frictional cost
savings, while limiting the aggregate risk exposure in the portfolio and mitigating earnings volatility.
Clearnet will be an ideal partner to assist us in helping to lower the overall frictional cost
of trading within the region.
Reinsurers and retrocessionaires incur tremendous costs because of the lack of standards, and the existence of the hub will drive standards to the marketplace and dramatically cut down on the frictional cost
of the process," McCarthy said.
With a more predictable portfolio, a company can raise its retentions and garner frictional cost
savings, while calling on aggregate protection that comes into effect once its risk tolerance level is exceeded.