The impact of unexpected natural disasters on insurance markets

Ghanshyam Sharma and Kurt W. Rotthoff

Applied Economics Letters, 2020, vol. 27, issue 6, 494-497

Abstract: In this paper, we examine the impact of unexpected natural disasters on the insurance industry. The industry is exposed to greater risks in states with large populations. Hence, we normalize the unexpected disasters with the population of the state. We find evidence that the total sales of the insurance industry goes up in response to an unexpected disaster. However, we also find evidence that unexpected disasters lead to higher market concentration. This could either be because some insurance firms becoming insolvent or people preferring to purchase insurance from larger firms.

Date: 2020
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DOI: 10.1080/13504851.2019.1637508

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