Encyclopedia of Law and Economics

2019 Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

Insurance Market Failures

  • Donatella PorriniEmail author
Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7753-2_615

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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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Management, Economics, Mathematics and StatisticsUniversity of SalentoLecceItaly