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Insurance and Insurance Markets

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  • Dionne, Georges

    (HEC Montreal, Canada Research Chair in Risk Management)

  • Harrington, Scott

    (University of Pennsylvania)

Abstract

Kenneth Arrow and Karl Borch published several important articles in the early 1960s that can be viewed as the beginning of modern economic analysis of insurance activity. This chapter reviews the main theoretical and empirical contributions in insurance economics since that time. The review begins with the role of utility, risk, and risk aversion in the insurance literature and then summarizes work on the demand for insurance, insurance and resource allocation, moral hazard, and adverse selection. It then turns to financial pricing models of insurance and to analyses of price volatility and underwriting cycles; insurance price regulation; insurance company capital adequacy and capital regulation; the development of insurance securitization and insurance-linked securities; and the efficiency, distribution, organizational form, and governance of insurance organizations.

Suggested Citation

  • Dionne, Georges & Harrington, Scott, 2017. "Insurance and Insurance Markets," Working Papers 17-2, HEC Montreal, Canada Research Chair in Risk Management.
    • Handle: RePEc:ris:crcrmw:2017_002
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    1. Sunday Stephen AJEMUNIGBOHUN & Ogorchukwu Augustine ISIMOYA & Ayobami Folarin ELEGUNDE, 2020. "Risk Attitude, Insurance Patronage and SMEs Performance: Empirical Evidence from Lagos, Nigeria," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 70-78.
    2. Guo, Xu & Li, Jingyuan & Liu, Dongri & Wang, Jianli, 2016. "Preserving the Rothschild–Stiglitz type of increasing risk with background risk," Insurance: Mathematics and Economics, Elsevier, vol. 70(C), pages 144-149.
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    1. Henri Loubergé, 1998. "Risk and Insurance Economics 25 Years After," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 23(4), pages 540-567, October.
    2. Dionne, Georges, 2012. "The empirical measure of information problems with emphasis on insurance fraud and dynamic data," Working Papers 12-10, HEC Montreal, Canada Research Chair in Risk Management.
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    More about this item

    Keywords

    Insurance; insurance market; risk sharing; moral hazard; adverse selection; demand for insurance; financial pricing of insurance; price volatility; insurance regulation; capital regulation; securitization; insurance-linked security; organization form; governance of insurance firms.;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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