When natural disasters strike, non-life insurance companies sell short-term sovereign debt and thereby push up borrowing costs for eurozone governments, research from the European Central Bank finds.
The paper, published on December 2, finds that in countries where insurers hold more domestic bonds, the firms tend to dump a greater amount of short-term government debt in response to disasters. The authors – Stefano Corradin, Alessandro Fontana, Christian Kubitza and Angela Maddaloni – say this
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