Statistical Science

Insurability of Hazardous Materials Activities

Michael S. Baram

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Insurance is essential to technologic advance and also serves other important social functions. "Insurance market failures" must therefore be evaluated so that appropriate remedial actions can be taken by private insurers, and in some instances, by government. The recent insurance crisis for companies producing and using hazardous materials is examined, with particular attention given to six factors: new tort liability rules, judicial interpretation of insurance contracts, declining interest rates, reluctant reinsurers, government policies based on "new federalism" concepts and inadequate attention to risk analysis. The importance of improving risk analysis techniques to promote their use by insurers is determined to be the fundamental reform needed to restore the private insurance function.

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Statist. Sci., Volume 3, Number 3 (1988), 339-345.

First available in Project Euclid: 19 April 2007

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Insurance tort liability reinsurance interest rates risk analysis hazard insurance


Baram, Michael S. Insurability of Hazardous Materials Activities. Statist. Sci. 3 (1988), no. 3, 339--345. doi:10.1214/ss/1177012835.

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