On the Corporate Demand for Insurance

Abstract

Insurance contracts are regularly purchased by corporations. The Insurance Information Institute reports that “business insurance accounted for approximately 54.2 percent of the 79, 032,923,000 in direct property and liability insurance premiums written in the United States in 1978” (1979, p. 9). Yet even though annual premiums exceeded 42.8 billion,1 the importance of these contracts has been largely ignored by the finance profession. For example, the topic of insurance is completely absent from the index of virtually all corporate finance textbooks.