Introducing disaster insurance funds can improve efficiency in the market by increasing buyer demand and lowering prices for sellers. The model predicts that sellers' revenues may decrease with the introduction of disaster insurance. The Terrorism Risk Insurance Act (TRIA) led to negative effects on the insurance industry, especially for larger and low-risk-averse firms. Seller's risk aversion is crucial in understanding these effects, and there may be instances where firms are overly protected with disaster insurance.