Does Private Insurance Reduce Environmental Accidents ?
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چکیده
| Summer 2012 M any of the risks faced by firms and individuals are spread across the economy through government assurance programs. Prominent examples include bank deposit insurance, pension benefit guarantee funds, and hazardous material cleanup funds. A salient feature of these government assurance programs is the absence of risk-based pricing: they do not charge insured individuals a premium commensurate with the specific risk that each one poses. As a result, the programs protect beneficiaries from adverse events at a subsidized price. The absence of an actuarially-based pricing structure may exacerbate moral hazard, raising the frequency of adverse events by lessening incentives for risk-reducing efforts. An example of this can be found in government-managed assurance programs for gas station fuel leaks. In the late 1980s, new federal regulations required gas stations and owners of underground fuel tanks to demonstrate they are financially capable of cleaning up underground fuel leaks and compensating third parties for consequential damages. Michigan, Illinois, and Indiana soon created state assurance programs to subsidize firms’
منابع مشابه
Risk-based Pricing and Risk-reducing Effort: Does the Private Insurance Market Reduce Environmental Accidents?
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تاریخ انتشار 2012