Large Fires and the Rise of Fire Insurance in Early Twentieth-Century Japan

Tetsuji Okazaki, Toshihiro Okubo and Eric Strobl

The Journal of Economic History, 2025, vol. 85, issue 3, 701-729

Abstract: We explore the role that large fires played in the early development of the Japanese fire insurance industry. Using a prefecture-level data set spanning 30 years, our econometric analysis shows that large fires led to an increase in new policies and policy renewals, consistent with historical narratives that insurance companies used these events to advertise their business. We also show that this subsequent surge in policies led to more small fires due to arson. Anecdotal evidence suggests that it is more likely to have been due to moral hazard rather than adverse selection.

Date: 2025
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