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Insurance Market Failures

Encyclopedia of Law and Economics

Abstract

Insurance market is characterized by failures that impose particular negative consequences; given the failures, different remedies may improve the market outcome. On one hand, the insurance market is characterized by asymmetric information, i.e. moral hazard and adverse selection, and to correct the consequent severe market failures, monitoring and risk classification can be implemented. On the other hand, the insolvency issue: given the enormous amounts of funds in the hands of insurance companies, their default would have an extreme impact, and regulation is necessary to guarantee the payback for policyholders and beneficiaries.

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Authors and Affiliations

  1. Department of Management, Economics, Mathematics and Statistics, University of Salento, Lecce, Italy

    Donatella Porrini

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  1. Donatella Porrini
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Correspondence to Donatella Porrini .

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Editors and Affiliations

  1. Montpellier, France

    Alain Marciano

  2. Dept DiGSPES, Univ del Piemonte Orientale Dept DiGSPES, Alessandria, Italy

    Giovanni Battista Ramello

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Porrini, D. (2017). Insurance Market Failures. In: Marciano, A., Ramello, G. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7883-6_615-1

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  • DOI: https://doi.org/10.1007/978-1-4614-7883-6_615-1

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  • Publisher Name: Springer, New York, NY

  • Print ISBN: 978-1-4614-7883-6

  • Online ISBN: 978-1-4614-7883-6

  • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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Chapter history

  1. Latest

    Insurance Market Failures
    Published:
    19 August 2021

    DOI: https://doi.org/10.1007/978-1-4614-7883-6_615-2

  2. Original

    Insurance Market Failures
    Published:
    16 February 2017

    DOI: https://doi.org/10.1007/978-1-4614-7883-6_615-1

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