Large-Scale Disasters and the Insurance Industry

U of Dortmund Discussion Paper No. 11/05

CESifo Working Paper Series, No. 2243

29 Pages Posted: 1 Apr 2005

See all articles by Walter Kraemer

Walter Kraemer

University of Dortmund - Department of Statistics; CESifo (Center for Economic Studies and Ifo Institute)

Sebastian Schich

Organisation for Economic Co-operation and Development (OECD)

Date Written: March 2008

Abstract

We investigate the impact of the 20 largest - in terms of insured losses - man-made or natural disasters on various insurance industry stock indices. We show via an event study that insurance sectors worldwide are quite resilient, in a market-value sense, to unexpected losses to capital: our data provide evidence that equity market investors believe that insurance companies will on average be able to make losses back over the foreseeable future, i.e. that the adverse shocks to equity which have resulted from these catastrophes will be compensated by either an outward shift of the demand curve or an ability to raise premiums, or both.

Keywords: Disaster, insurance industry, event-study

JEL Classification: E44, G14, G22, Q54

Suggested Citation

Kraemer, Walter and Schich, Sebastian, Large-Scale Disasters and the Insurance Industry (March 2008). U of Dortmund Discussion Paper No. 11/05, CESifo Working Paper Series, No. 2243, Available at SSRN: https://ssrn.com/abstract=680382

Walter Kraemer

University of Dortmund - Department of Statistics ( email )

D-44221 Dortmund
Germany
0231 755-3125 (Phone)
0231 755-5284 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Sebastian Schich (Contact Author)

Organisation for Economic Co-operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 4524 1419 (Phone)
+33 1 4524 9050 (Fax)

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