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Strategic Claim Payment Delays: Evidence from Property and Casualty Insurance

Author

Listed:
  • Chotibhak Jotikasthira

    (Southern Methodist University (SMU) - Finance Department)

  • Anastasia Kartasheva

    (University of St. Gallen - School of Finance; Swiss Finance Institute; Joshua J. Harris Alternative Investment Program)

  • Christian T. Lundblad

    (University of North Carolina Kenan-Flagler Business School; Frank Hawkins Kenan Institute of Private Enterprise)

  • Tarun Ramadorai

    (Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI))

Abstract

Following adverse events, insurers not only raise premiums but also delay claim payments, potentially imposing high state-contingent costs on clients who experience losses. These delays increase losses payable, one of the largest liability items on insurers’ balance sheets, augmenting insurer liquidity analogously to interest-free credit. Claim payment delays are larger and more prevalent for insurers that are less capitalized, less liquid, and those who serve clients who are less likely to complain to the regulator. In addition to losses in the same line of business, delays, unlike premiums, also increase in response to losses in unrelated lines of business.

Suggested Citation

  • Chotibhak Jotikasthira & Anastasia Kartasheva & Christian T. Lundblad & Tarun Ramadorai, 2025. "Strategic Claim Payment Delays: Evidence from Property and Casualty Insurance," Swiss Finance Institute Research Paper Series 25-14, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2514
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5115108
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    More about this item

    Keywords

    Claim payments; Delays; Financial constraints;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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