Article,
Adverse selection and moral hazard in corporate insurance markets: Evidence from the 2011 Thailand floods
Contributors
Adachi, Daisuke
0000-0002-7086-4432
(Corresponding author)
[1]
Nakata, Hiroyuki
0000-0001-5559-0640
[2]
[3]
Sawada, Yasuyuki
0000-0002-4167-7697
[3]
Affiliations
- [1] Aarhus University [NORA names: AU Aarhus University; University; Denmark; Europe, EU; Nordic; OECD];
- [2] Research Institute of Economy, Trade and Industry (RIETI)
- [3] The University of Tokyo [NORA names: Japan; Asia, East; OECD];
- [4] Ministry of Economy, Technology and Industry (METI)
Abstract
This paper is the first empirical study on adverse selection and moral hazard in the corporate disaster insurance market. By constructing and examining a unique plant-level panel dataset on the 2011 Thailand floods, we overcome the general lack of data that has previously prevented a systematic study on the issue. By exploiting unexpected, large losses caused by a severe disaster, we find evidence of adverse selection for both property and business interruption insurance. Moral hazard, measured by impacts on recovery efforts, is also found for both types of insurance, albeit more salient effects for business interruption insurance.
Keywords
Thailand,
Thailand floods,
adverse selection,
business,
business interruption insurance,
data,
dataset,
disaster,
disaster insurance market,
effect,
efforts,
empirical studies,
evidence,
evidence of adverse selection,
flood,
hazard,
impact,
insurance,
insurance market,
issues,
loss,
market,
moral hazard,
panel dataset,
plant‐level panel dataset,
properties,
recovery,
recovery efforts,
salient effects,
selection,
severe disasters,
study,
systematic study
