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Pricing method improving the compensation liability of the fraternal insurance of real estate brokerage

  • Korea Real Estate Review
  • 2010, 20(1), pp.329-347
  • Publisher : korea real estate research institute
  • Research Area : Social Science > Law > Law of Special Parts > Law of Real Estate

김대환 1 김혜란 1 Ki Hyung Lee 1 Lee Sung-Gun 2

1보험연구원
2경희대학교

Accredited

ABSTRACT

It has been pointed out that disparities between clauses of the fraternal insurance in real estate brokerage and judicial precedents damage not only the solvency of the fraternal insurer, but also clients in the real estate market. Also the current pricing mechanism dwindles equity among real estate agents since the pricing mechanism does not reflect agent's business record over the year. This study suggests appropriate pricing mechanisms in the fraternal insurance of real estate brokerage for the short-term and long-term. In the short-term, the premium level should be adjusted according to the risk level in order to tighten the solvency of the insurer and protect the insured. In the long-term, we suggest two pricing methods; one is to vary the premium level based on the number of transaction and the other is to set both liability limit for each transaction and total annual liability limit for each brokerage house. Following our analysis, the former is suggested to improve the solvency of the insurer and to protect clients. Calculating premiums for the former mechanism, however, requires information for each transaction in the real estate market.

Citation status

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