The Transactions Cost Theory of Insurance: Contracting Impediments and Costs

The Law and Economics of Liability Insurance: A Theoretical and Empirical Review

“…Froot, Scharfstein and Stein (1993) suggest that the higher costs of external capital (as compared to internal capital) constitute an additional institutional justification for corporate insurance and other forms of hedging. In addition, corporations may purchase insurance because it is bundled with other services that they value, such as loss prevention and claims management (Mayers & Smith 1982;Skogh 1989). Having the same firm sell loss control advice and insurance makes loss-control recommendations more credible, because the entity making the recommendation is also responsible for paying any losses that might occur.…”

“…** Policy will not be attractively priced for an injurer wishing to be deliberately negligent. Reduce ex ante and ex post moral hazard Skogh (1989); Simon (1994); G. Cohen (1997-98), Van der Veer (2005- Average Utility = ½×U(0) + ½×U(W'), which is depicted in the graph as U e , and is half-way between 0 and U(W'). Notice that this is considerably less than the utility she would get from having wealth W with certainty, which is given by U(W).…”

Die Versicherungsnachfrage von Unternehmen: Eine Empirische Untersuchung der Sachversicherungsnachfrage deutscher Unternehmen

“…u. a. Main 1982Main , 1983Mayers und Smith 1982, 1987MacMinn 1987;Stulz 1984;Smith und Stulz 1985;Skogh 1989).…”

Insurance and the Institutional Economics of Financial Intermediation

“…They suggest that the comparative advantage of the insurance industry is in claims and administration services and in assistance on safety and maintenance projects. Skogh (1989a) argues that contractors' transaction costs may be a rationale for insurance. Mian and Smith (1989) study the management of trade credits, the demand for credit, factoring, and credit insurance.…”