An empirical analysis of the economic impact of federal terrorism reinsurance
AbstractThis paper examines the role of the federal government in the market for terrorism reinsurance. We investigate the stock price response of affected industries to a sequence of thirteen events culminating in the enactment of the Terrorism Risk Insurance Act (TRIA) of 2002. In the industries most likely to be affected by TRIA banking, construction, insurance, real estate investment trusts, transportation, and public utilities the stock price effect was primarily negative. The Act was at best value-neutral for property-casualty insurers because it eliminated the option not to offer terrorism insurance. The negative response of the other industries may be attributable to the Act's impeding more efficient private market solutions, failing to address nuclear, chemical, and biological hazards, and reducing market expectations of federal assistance following future terrorist attacks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 51 (2004)
Issue (Month): 5 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505566
Other versions of this item:
- Jeffrey R. Brown & J. David Cummins & Christopher M. Lewis & Ran Wei, 2004. "An Empirical Analysis of the Economic Impact of Federal Terrorism Reinsurance," NBER Working Papers 10388, National Bureau of Economic Research, Inc.
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schwert, G William, 1981. "Using Financial Data to Measure Effects of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 121-58, April.
- Kenneth A. Froot, 1999.
"The Market for Catastrophe Risk: A Clinical Examination,"
NBER Working Papers
7286, National Bureau of Economic Research, Inc.
- Froot, Kenneth A., 2001. "The market for catastrophe risk: a clinical examination," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 529-571, May.
- Kenneth A. Froot, 2001. "The Market for Catastrophe Risk: A Clinical Examination," NBER Working Papers 8110, National Bureau of Economic Research, Inc.
- Cutler, David M, 1988. "Tax Reform and the Stock Market: An Asset Price Approach," American Economic Review, American Economic Association, vol. 78(5), pages 1107-17, December.
- A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
- Kenneth A. Froot & Paul G. J. O'Connell, 1997.
"The Pricing of U.S. Catastrophe Reinsurance,"
NBER Working Papers
6043, National Bureau of Economic Research, Inc.
- James, Christopher, 1983. "An analysis of intra-industry differences in the effect of regulation : The case of deposit rate ceilings," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 417-432, September.
- Brown, Jeffrey R. & Kroszner, Randall S. & Jenn, Brian H., 2002.
"Federal Terrorism Risk Insurance,"
National Tax Journal,
National Tax Association, vol. 55(3), pages 647-57, September.
- Joskow, Paul L & McLaughlin, Linda, 1991. " McCarran-Ferguson Act Reform: More Competition or More Regulation?," Journal of Risk and Uncertainty, Springer, vol. 4(4), pages 373-401, December.
- Laurence Schumann, 1988. "State Regulation of Takeovers and Shareholder Wealth: The Case of New York's 1985 Takeover Statutes," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 557-567, Winter.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Doherty, Neil A & Lamm-Tennant, Joan & Starks, Laura T, 2003. " Insuring September 11th: Market Recovery and Transparency," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 179-99, March-May.
- Christopher Lewis & Kevin C. Murdock, 1999. "Alternative Means of Redistributing Catastrophic Risk in a National Risk-Management System," NBER Chapters, in: The Financing of Catastrophe Risk, pages 51-92 National Bureau of Economic Research, Inc.
- Dwight M. Jaffee & Thomas Russell, 1996. "Catastrophe Insurance, Capital Markets and Uninsurable Risks," Center for Financial Institutions Working Papers 96-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Sanjai Bhagat & Roberta Romano, 2001. "Event Studies and the Law: Part II - Empirical Studies of Corporate Law," Yale School of Management Working Papers amz2453, Yale School of Management, revised 01 Sep 2002.
- R. Anton Braun & Richard M. Todd & Neil Wallace, 1998. "The role of damage-contingent contracts in allocating the risks of natural catastrophes," Working Papers 586, Federal Reserve Bank of Minneapolis.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.