TortsProf Blog

Editor: Christopher J. Robinette
Southwestern Law School

Monday, September 5, 2022

Avraham & Porat on the Dark Side of Insurance

Ronen Avraham & Ariel Porat have posted to SSRN The Dark Side of Insurance.  The abstract provides:

When insurance works properly it provides insureds with optimal incentives to prevent losses, alongside coverage for losses that could not be prevented efficiently. But insurance has an overlooked dark side to it as well. Insurers employ various tactics to shift losses to their insureds or to their victims in order to minimize their own costs instead of reducing their insureds’ losses. Worse, insurers might also act to increase or maintain long term risks, ensuring the future of the insurance business that can’t exist without risks. To this end, we suspect, insurers engage in anti-competitive practices and trigger harmful behaviors of their insureds or third parties, in order to increase demand for insurance coverage. Policymakers should be aware and critical of insurers’ perverse incentives that counteract the interests of the insureds and society.

https://lawprofessors.typepad.com/tortsprof/2022/09/avraham-porat-on-the-dark-side-of-insurance.html

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