Corporate Demand for Insurance: New Evidence from the U.S. Terrorism and Property Markets

Financial support for this research was provided by Wharton's Managing and Financing Extreme Events project, DHS's Center of Excellence CREATE at the University of Southern California and Monash University. We thank George Akerlof, Neil Doherty, Marty Feldstein, Scott Harrington, Greg Nini, William Nordhaus, Jesse Shapiro, Terri Vaughan, and seminar participants at the American Economic Association annual meeting, National Bureau of Economic Research (NBER) Insurance Group, NBER Economics of National Security Group, University of Pennsylvania, University of Innsbruck, and the OECD high-level international conference on terrorism risk insurance markets for their comments and insightful discussions on an earlier version of this paper. We appreciated Marsh & McLennan sharing with us the data that were used for our analysis and are indebted to John Rand (formerly at Marsh) for many fruitful discussions on preliminary results. This article is forthcoming in the Journal of Risk and Insurance. The two journal referees provided excellent feedback on previous versions of the paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.