A general problem in insurance economics is to establish how insurance demand is affected by the size of the loss suffered in the previous period. This problem lays out the underlying objective of this study, which examines how insurance demand changes post-catastrophes, and how it can be...

The real-world insurance markets show that the experience of having an accident increases insurance purchases in the next period relative to insurance purchases when in the immediately prior period there was no accident. There have been several explanations put forward to explain such behaviour,...