Topics in insurance economics


This course provides an introduction to advanced research in insurance economics, with a focus on a number of specific topics, including insurance demand, adverse selection in insurance markets, insurance fraud, corporate risk management, ex-post moral hazard in health insurance, and the coverage of catastrophic risks.


I. Insurance demand:
– Wealth and price effects
– Background risks
– Umbrella policy (application to insurance captives for corporate risk management)
– Optimality of straight deductible contracts
– Insurance demand for low probability – high severity risks (the case of nuclear risk)
II. Adverse selection:
– The Rothschild-Stiglitz equilibrium puzzle
– Solving the puzzle
– Advantageous selection
III. Ex-post moral hazard in health insurance:
– The trade-off between incentives and risk-sharing
– Optimal health insurance (with illustration by the ObamaCare)
IV. Insurance fraud:
– Costly state verification
– Costly state falsification
– Audit with scoring (with application to fraud detection)


– Handbook of Insurance (2nd Edition), G. Dionne Editor, Springer 2013.
– Economic and Financial Decision under Risk, L. Eeckhoudt, C. Gollier and H. Schlesinger, Princeton University Press, 2005.