International Association for the Study of Insurance Economics
摘要:
This paper proposes a new method to directly test the existence of adverse
selection in the automobile insurance market. By tracing the renewal decisions of the
insured, we find that, in Taiwan automobile insurance market, the choice of insurance
coverage and the previous-year claim records are positive ly correlated, which can be a
result of adverse selection but not of moral hazard. We further find that the loss ratio is
positively correlated to the choice of insurance coverage. This indicates that
cross-subsidization may exist in the market. The finding of cross-subsidization further
strengthens the evidence to support the existence of adverse selection.
關聯:
Proceedings of the 33rd Seminar of the European Group of Risk and Insurance Economists