Adverse selection and moral hazard in corporate insurance markets: Evidence from the 2011 Thailand floods

Daisuke Adachi, Hiroyuki Nakata, Yasuyuki Sawada and Kunio Sekiguchi

Journal of Economic Behavior & Organization, 2023, vol. 205, issue C, 376-386

Abstract: This paper is the first empirical study on adverse selection and moral hazard in the corporate disaster insurance market. By constructing and examining a unique plant-level panel dataset on the 2011 Thailand floods, we overcome the general lack of data that has previously prevented a systematic study on the issue. By exploiting unexpected, large losses caused by a severe disaster, we find evidence of adverse selection for both property and business interruption insurance. Moral hazard, measured by impacts on recovery efforts, is also found for both types of insurance, albeit more salient effects for business interruption insurance.

Keywords: Adverse selection; Business interruption insurance; Moral hazard; Property insurance (search for similar items in EconPapers)
JEL-codes: D82 G22 H84 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Adverse Selection and Moral Hazard in the Corporate Insurance Market: Evidence from the 2011 Thailand floods (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:205:y:2023:i:c:p:376-386

DOI: 10.1016/j.jebo.2022.11.027

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