Law and economics of insurance

Daniel Schwarcz, Peter Siegelman

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

This chapter broadly defines the law and economics of insurance. An overview of both economically oriented legal scholarship and traditional economics scholarship is provided. This vantage point reveals the centrality of certain core economic concepts to insurance law and regulation. Moreover, it suggests ways to improve the law by embracing sophisticated understandings of the economics of information asymmetries. For instance, insurance law and regulation assume that adverse selection and moral hazard are important problems in all insurance markets; however, the phenomena come in varying degrees. Thus, their magnitude is an empirical question. An equally significant lacuna in much insurance law is the absence of an equilibrium approach that anticipates insurance market reactions to legal interventions. Similarly, the specific insights of behavioral economics to understand anomalies in insurance demand and how the law might respond are emerging. The law and economics of insurance is still ripe for development.

Original languageEnglish (US)
Title of host publicationThe Oxford Handbook of Law and Economics
Subtitle of host publicationVolume 2: Private and Commercial Law
PublisherOxford University Press
Pages481-508
Number of pages28
ISBN (Electronic)9780199684205
DOIs
StatePublished - Jan 1 2017

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Keywords

  • Economics scholarship
  • Insurance law
  • Insurance legislation
  • Insurance regulation
  • Legal scholarship

Cite this

Schwarcz, D., & Siegelman, P. (2017). Law and economics of insurance. In The Oxford Handbook of Law and Economics: Volume 2: Private and Commercial Law (pp. 481-508). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780199684205.013.030