Hinck, Sebastian; Steinorth, Petra - In: Journal of Risk and Insurance 90 (2023) 4, pp. 991-1026
We analyze insurance demand when insurable losses come with an uninsurable zero‐mean background risk that increases in … the loss size. If the individual is risk vulnerable, loss‐dependent background risk triggers a precautionary insurance … large loss case, prudence determines whether changes in the background risk lead to more insurance demand. We generalize …