Catastrophes and the Demand for Life Insurance

Fier, Stephen G.; Carson, James M.
September 2015
Journal of Insurance Issues;Fall2015, Vol. 38 Issue 2, p125
Academic Journal
Prior research suggests that catastrophes may lead to increases in risk mitigation, risk perception, and the demand for insurance. Given the extensive damage inflicted by major natural disasters, such a phenomenon is intuitive for property risk. However, theory and prior empirical evidence also suggest a broader behavioral perspective and we therefore examine the possible link between catastrophes and subsequent demand for insurance against mortality risk. Based on U.S. state-level data, we provide evidence of a significant positive relation between catastrophes and several measures of life insurance demand. [Key words: catastrophes, insurance demand, natural disasters.] JEL classification: C23, D80, G22, Q54.


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