The Impact of Unexpected Natural Disasters on Insurance Markets
Posted: 17 Jul 2018
Date Written: June 27, 2018
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 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.
Keywords: Catastrophic Risks, Natural Disasters, Insurance Markets
Suggested Citation: Suggested Citation