IDEAS home Printed from https://ideas.repec.org/p/ris/crcrmw/2024_001.html
   My bibliography  Save this paper

Developments in risk and insurance economics: The past 50 years

Author

Listed:
  • Henri Loubergé

    (Université de Genève)

  • Georges Dionne

    (HEC Montreal, Canada Research Chair in Risk Management)

Abstract

The chapter reviews the evolution in risk and insurance economics over the past 50 years, first recalling the situation in 1973, then presenting the developments and new approaches that have flourished since then. We argue that these developments were only possible because steady advances were made in the economics of risk and uncertainty and in financial theory. Insurance economics has grown in importance to become a central theme in modern economics, providing not only practical examples and original data to illustrate new theories, but also inspiring new ideas that are relevant to the overall economy.

Suggested Citation

  • Henri Loubergé & Georges Dionne, 2024. "Developments in risk and insurance economics: The past 50 years," Working Papers 24-1, HEC Montreal, Canada Research Chair in Risk Management.
    • Handle: RePEc:ris:crcrmw:2024_001
    as

    Download full text from publisher

    File URL: https://www.risksresearch.com/_files/ugd/a6eed3_fa821633b40c431b8e0a589c0b4a715f.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hanming Fang & Michael P. Keane & Dan Silverman, 2008. "Sources of Advantageous Selection: Evidence from the Medigap Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 303-350, April.
    2. Jiang Cheng & Elyas Elyasiani & Jingyi (Jane) Jia, 2011. "Institutional Ownership Stability and Risk Taking: Evidence From the Life–Health Insurance Industry," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(3), pages 609-641, September.
    3. repec:bla:scandj:v:97:y:1995:i:1:p:123-35 is not listed on IDEAS
    4. Narjess Boubakri, 2011. "Corporate Governance and Issues From the Insurance Industry," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(3), pages 501-518, September.
    5. Doherty, Neil A. & Kang, Han Bin, 1988. "Interest rates and insurance price cycles," Journal of Banking & Finance, Elsevier, vol. 12(2), pages 199-214, June.
    6. Ilia Tsetlin & Robert L. Winkler, 2005. "Risky Choices and Correlated Background Risk," Management Science, INFORMS, vol. 51(9), pages 1336-1345, September.
    7. Hyojoung Kim & Doyoung Kim & Subin Im & James W. Hardin, 2009. "Evidence of Asymmetric Information in the Automobile Insurance Market: Dichotomous Versus Multinomial Measurement of Insurance Coverage," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(2), pages 343-366, June.
    8. William B. Fairley, 1979. "Investment Income and Profit Margins in Property-Liability Insurance: Theory and Empirical Results," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 192-210, Spring.
    9. M. Martin Boyer & Eric Jacquier & Simon Van Norden, 2012. "Are Underwriting Cycles Real and Forecastable?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(4), pages 995-1015, December.
    10. Mayers, David & Smith, Clifford W, Jr, 1990. "On the Corporate Demand for Insurance: Evidence from the Reinsurance Market," The Journal of Business, University of Chicago Press, vol. 63(1), pages 19-40, January.
    11. Rochet, Jean-Charles & Villeneuve, Stéphane, 2011. "Liquidity management and corporate demand for hedging and insurance," Journal of Financial Intermediation, Elsevier, vol. 20(3), pages 303-323, July.
    12. Aunon-Nerin, Daniel & Ehling, Paul, 2008. "Why firms purchase property insurance," Journal of Financial Economics, Elsevier, vol. 90(3), pages 298-312, December.
    13. Smart, Michael, 2000. "Competitive Insurance Markets with Two Unobservables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 153-169, February.
    14. Neil Doherty & Richard Phillips, 2002. "Keeping up with the Joneses: Changing Rating Standards and the Buildup of Capital by U.S. Property-Liability Insurers," Journal of Financial Services Research, Springer;Western Finance Association, vol. 21(1), pages 55-78, February.
    15. David Mayers & Clifford Smith, 2002. "Ownership Structure and Control: Property-Casualty Insurer Conversion to Stock Charter," Journal of Financial Services Research, Springer;Western Finance Association, vol. 21(1), pages 117-144, February.
    16. Jianli Wang & Jingyuan Li, 2015. "Precautionary Effort: Another Trait for Prudence," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 82(4), pages 977-983, December.
    17. Brennan, Michael J. & Schwartz, Eduardo S., 1976. "The pricing of equity-linked life insurance policies with an asset value guarantee," Journal of Financial Economics, Elsevier, vol. 3(3), pages 195-213, June.
    18. Kunreuther, Howard & Pauly, Mark, 1985. "Market equilibrium with private knowledge : An insurance example," Journal of Public Economics, Elsevier, vol. 26(3), pages 269-288, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Georges Dionne & Scott Harrington, 2017. "Insurance and Insurance Markets," Working Papers 17-2, HEC Montreal, Canada Research Chair in Risk Management.
    2. 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.
    3. 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.
    4. Georges Dionne & Nathalie Fombaron & Neil Doherty, 2012. "Adverse Selection in Insurance Contracting," Cahiers de recherche 1231, CIRPEE.
    5. Georges Dionne & Nathalie Fombaron & Wanda Mimra, 2025. "Adverse Selection in Insurance," Springer Books, in: Georges Dionne (ed.), Handbook of Insurance, edition 0, pages 165-221, Springer.
    6. Upreti, Vineet & Adams, Mike, 2015. "The strategic role of reinsurance in the United Kingdom’s (UK) non-life insurance market," Journal of Banking & Finance, Elsevier, vol. 61(C), pages 206-219.
    7. Martin Eling & Ruo Jia & Yi Yao, 2017. "Between-Group Adverse Selection: Evidence From Group Critical Illness Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(2), pages 771-809, June.
    8. Gan, Li & Huang, Feng & Mayer, Adalbert, 2015. "A simple test for private information in insurance markets with heterogeneous insurance demand," Economics Letters, Elsevier, vol. 136(C), pages 197-200.
    9. de Meza, David & Webb, David C., 2017. "False diagnoses: pitfalls of testing for asymmetric information in insurance markets," LSE Research Online Documents on Economics 65744, London School of Economics and Political Science, LSE Library.
    10. Azevedo, Eduardo M. & Gottlieb, Daniel, 2019. "An example of non-existence of Riley equilibrium in markets with adverse selection," Games and Economic Behavior, Elsevier, vol. 116(C), pages 152-157.
    11. repec:mea:meawpa:12259 is not listed on IDEAS
    12. Lin, Chen & Lin, Ping & Zou, Hong, 2012. "Does property rights protection affect corporate risk management strategy? Intra- and cross-country evidence," Journal of Corporate Finance, Elsevier, vol. 18(2), pages 311-330.
    13. Ben Ammar, Semir & Eling, Martin & Milidonis, Andreas, 2015. "Asset Pricing of Financial Insitutions: The Cross-Section of Expected Stock Returns in the Property/Liability Insurance Industry," Working Papers on Finance 1516, University of St. Gallen, School of Finance.
    14. Martin Spindler & Joachim Winter & Steffen Hagmayer, 2014. "Asymmetric Information in the Market for Automobile Insurance: Evidence From Germany," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 81(4), pages 781-801, December.
    15. Dionne, Georges & Michaud, Pierre-Carl & Pinquet, Jean, 2013. "A review of recent theoretical and empirical analyses of asymmetric information in road safety and automobile insurance," Research in Transportation Economics, Elsevier, vol. 43(1), pages 85-97.
    16. Dardanoni, Valentino & Li Donni, Paolo, 2012. "Incentive and selection effects of Medigap insurance on inpatient care," Journal of Health Economics, Elsevier, vol. 31(3), pages 457-470.
    17. Travis R. Davidson & Roger M. Shelor, 2014. "An Empirical Investigation of the Demand for Bank‐Owned Life Insurance," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 23(5), pages 303-321, December.
    18. Rachel J. Huang & Arthur Snow & Larry Y. Tzeng, 2017. "Advantageous Selection in Insurance Markets with Compound Risk," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 42(2), pages 171-192, September.
    19. Elisa Luciano & Jean Charles Rochet, 2021. "Risk Appetite Fluctuations in the Insurance Industry," Carlo Alberto Notebooks 666 JEL Classification: G, Collegio Carlo Alberto.
    20. Simone Krummaker, 2019. "Firm's demand for insurance: An explorative approach," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 22(3), pages 279-301, September.
    21. Cummins, J. David & Danzon, Patricia M., 1997. "Price, Financial Quality, and Capital Flows in Insurance Markets," Journal of Financial Intermediation, Elsevier, vol. 6(1), pages 3-38, January.

    More about this item

    Keywords

    Insurance economics; optimal insurance protection; optimal self-protection; insurance pricing; insur;
    All these keywords.

    JEL classification:

    • A33 - General Economics and Teaching - - Multisubject Collective Works - - - Handbooks
    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • D10 - Microeconomics - - Household Behavior - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G52 - Financial Economics - - Household Finance - - - Insurance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:crcrmw:2024_001. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Claire Boisvert (email available below). General contact details of provider: https://edirc.repec.org/data/hecmtca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.