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Market responses to loss shocks and insurers' post-catastrophe performance in the US property-casualty insurance market

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  • Ning Wang
  • Yiling Deng

Abstract

We employ impulse response analyses to study aggregated time series data of the US property-casualty insurance market. We find that insurance price is more sensitive towards loss shocks than total premiums. Our results at the industry level support capacity constraint theory that loss shocks significantly increase insurance price and reduce insurance coverage quantity. The data at the firm level is also examined. We find a positive relationship between insurers' post-catastrophe performance and capital capacity while their post-catastrophe performance is ambiguously associated with financial quality and losses. Our findings suggest that the capital recovery after catastrophes in the insurance market is intelligible and some ordered.

Suggested Citation

  • Ning Wang & Yiling Deng, 2016. "Market responses to loss shocks and insurers' post-catastrophe performance in the US property-casualty insurance market," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(3), pages 231-246.
    • Handle: RePEc:ids:ijecbr:v:11:y:2016:i:3:p:231-246
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