The purpose of this study is to examine whether high-risk groups tend to choose a higher insured amount and whether a higher insured amount leads to a higher loss ratio. Data of 2009 on group injury insurance from a property-liability company in Taiwan is analyzed by using a structural quotation model. Eight variables are used to describe the relationship between risk factors and the selection of the insured amount. The result indicates that both underwriting and rating have a significant positive impact on the selection of the insured amount. The analysis of the relationship between a high insured amount and a high loss ratio indicates that both the medical expense insured amount and the daily hospitalization indemnity have significant positive impact on the loss ratio. The results of this study can help underwriters establish a sound underwriting and rating system and also increase underwriting profits.
