Guaranty Funds and Risktaking: Evidence from the Insurance Industry
Working Paper FR 95-07
Posted: 28 Jun 1998
Date Written: February 1995
This paper examines changes in property-liability insurers risktaking associated with the enactment of state guaranty fund laws. We present evidence that the risk of insurers' asset portfolios increased following enactments. But the increase in risk is significant only for stock insurers. This evidence of increased asset risk following guarantee-fund adoptions helps explain the increase in insurer insolvencies in recent years.
JEL Classification: G22
Suggested Citation: Suggested Citation