Insuring Liability Risks

Insuring Liability Risks

(Over)insuring Modest Risks

Despite the large literature on anomalies in risky choice, very little research has explored the relevance of these insights in real insurance markets. This paper uses new data on consumers’ choices of deductibles for home insurance to provide evidence that a surprising level of risk aversion over modest stakes is a reality in the market. Most customers purchase low deductibles despite costs si...

Insuring risks when pure premium is infinite ?

Insurability is a major issue for risk managers in the insurance industry. Zajdenweber (1996) mentioned that business interruption is hardly insurable, using extreme value results: the right tail of the distribution should be modeled using some Pareto distribution with parameter 1, which has none finite moment. Since the expected value in tails is infinite, on a theoretical point of view, it be...

The Products Liability Directive: A Mandatory Development Risks Defense

This Note argues that the optional inclusion of the development risks defense in Member State legislation undermines the Products Liability Directive by impeding harmonization of products liability laws in the Community. Part I sets forth the background and content of the Products Liability Directive. Part II discusses the implementation of the Products Liability Directive in Member State legis...

Retroactive Liability and the Insurability of Long-Tail Risks

This article focuses on a specific aspect of liability insurance that arises out of the latent nature of certain insured events. In particular, it is concerned with the fact that in the interval between the original tort and the claim for damages the standard of care applied by the courts may change. This is the problem of retroactive liability. The article begins by briefly reviewing the legal...