The Efficient Liability Sharing Factor for Environmental Disasters: Lessons for Optimal Insurance Regulation

Boyer, Marcel; Porrini, Donatella

doi:10.2139/ssrn.1138383

Cited by 2 publications

(1 citation statement)

References 25 publications

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“…In the market, there is a dilemma that insurance companies cherish insurance and insurance companies have low enthusiasm. Many scholars have put forward suggestions on risk control, such as establishing a liability sharing mechanism for insurance companies (Boyer & Porrini, 2008), a joint insurance system (Yang, Liu, Guo, & Jia, 2020) to improve the ability of insurance companies to disperse risks, and improving the enthusiasm of enterprises to insure through government subsidy support (Feng, Mol, Lu, He, & Van Koppen, 2014) and derivative environmental financial product design (Pu, Addai, Pan, & Bo, 2017). This paper is to solve the dilemma from the perspective of adverse selection of environmental liability insurance, through the discussion and solution of adverse selection to better prevent the risk of environmental liability insurance.…”

Section: Background Literaturementioning

confidence: 99%

Adverse selection, limited compensation, and the design of environmental liability insurance contract in the case of enterprise bankruptcy

Li³

et al. 2020

Manage Decis Econ

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In the case of incomplete environmental liability insurance, enterprises are likely to go bankrupt. Rational enterprises generally do not want to insure the environmental loss liability in case of bankruptcy even if they are compensated by insurance companies. This means that the premium calculated now is high, which may be the main reason for the current enterprises to cherish insurance. Based on this, a basic model of environmental liability insurance contract considering bankruptcy under ex ante asymmetric information is established. The model is improved by using the information screening combination tool, which further improves the efficiency of information screening.

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Section: Background Literaturementioning

confidence: 99%

Adverse selection, limited compensation, and the design of environmental liability insurance contract in the case of enterprise bankruptcy

Li³

et al. 2020

Manage Decis Econ

View full text Add to dashboard Cite

show abstract

Risky Activities and Strict Liability Rules: Delegating Safety

Mondello

2010

SSRN Journal

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This paper studies the delegation of activities that pose serious risks to health and the environment in an economy regulated by strict liability schemes. Strict liability induces judgment-proof possibilities. Two civil liability regimes are then compared: a strict liability scheme and a capped strict liability one. The argument is led under a twofold asymmetric information assumption between the principal and the agent: the efficiency level in effort for safety and the agent's level of wealth. The paper shows that standard strict liability under information asymmetries deters the efficient agent to compete and favors adverse selection. Then, under conditions, a capped strict liability regime is a better regime than a standard strict liability one because it induces the efficient agent to supply the level of safety effort equivalent to the first best solution. The counterpart is the perception of an informational rent by the efficient agent. At the optimum, this rent is minimized by the efficient contract supplied by the principal.

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The Efficient Liability Sharing Factor for Environmental Disasters: Lessons for Optimal Insurance Regulation

Cited by 2 publications

References 25 publications

Adverse selection, limited compensation, and the design of environmental liability insurance contract in the case of enterprise bankruptcy

Adverse selection, limited compensation, and the design of environmental liability insurance contract in the case of enterprise bankruptcy

Risky Activities and Strict Liability Rules: Delegating Safety

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