How Crime Shapes Insurance and Insurance Shapes Crime

Journal of Legal Analysis, Vol.15, p.183, 2023

U of Penn, Inst for Law & Econ Research Paper No. 23-10

18 Pages Posted: 16 Mar 2023 Last revised: 8 Sep 2023

See all articles by Tom Baker

Tom Baker

University of Pennsylvania Carey Law School

Anja Shortland

King's College, London

Date Written: March 10, 2023

Abstract

Crime creates demand for insurance but supplying insurance may promote crime. We examine five case studies of insured crimes (auto theft, art theft, kidnap and hijack for ransom, ransomware, and payment card fraud) and find a co-evolutionary process through which insurers engage with insureds, governments, and legal and extralegal third parties to mitigate losses, particularly when criminal innovations destabilize the insurance market. “Insurance as crime governance” stimulates demand for security, shapes criminal incentives, engages with the state to combat crime, and tolerates some crime in the interest of profitability.

Keywords: Insurance against crime, governance, risk assessment & management, crime prevention, security, technology, behavioral economics, theft, kidnap & hijack for ransom, fraud, ransomware

JEL Classification: G22, K14, K42

Suggested Citation

Baker, Tom and Shortland, Anja, How Crime Shapes Insurance and Insurance Shapes Crime (March 10, 2023). Journal of Legal Analysis, Vol.15, p.183, 2023, U of Penn, Inst for Law & Econ Research Paper No. 23-10, Available at SSRN: https://ssrn.com/abstract=4390802

Tom Baker (Contact Author)

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-2185 (Phone)

HOME PAGE: http://www.law.upenn.edu/cf/faculty/thbaker/

Anja Shortland

King's College, London ( email )

Strand
London, England WC2R 2LS
United Kingdom

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