Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks

Erwann Michel-Kerjan, Paul Raschky and Howard C. Kunreuther ()

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: This paper tests some existing theories developed over the past 25 years on corporate demand for insurance. Using a unique dataset of 1,809 large U.S. corporations it provides the first empirical analysis that compares corporate demand for standard property insurance and for catastrophe coverage (here, terrorism). We find that larger companies are more likely to have some catastrophe coverage. Corporate demand for catastrophe insurance is found to be more price inelastic than insurance for non-catastrophe risks. This result differs from the findings on individual demand for insurance. The terrorism insurance premium per dollar of coverage is twice as high in the New York Metropolitan area than in the rest of the U.S. Yet the price elasticity of the demand for terrorism insurance is half in this area relative to the rest of the country.

Keywords: Corporate decision making; insurance; terrorism (search for similar items in EconPapers)
JEL-codes: D21 D81 G22 H56 (search for similar items in EconPapers)
Pages: 37
Date: 2009-03
New Economics Papers: this item is included in nep-ias
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www2.uibk.ac.at/downloads/c4041030/wpaper/2009-10.pdf (application/pdf)

Related works:
Working Paper: Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks (2011)
Working Paper: Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2009-10

Access Statistics for this paper

More papers in Working Papers from Faculty of Economics and Statistics, Universität Innsbruck Contact information at EDIRC.
Bibliographic data for series maintained by Judith Courian ().