This paper examines whether advantageousselection exists in the commercial fire insurance market. By means of a unique survey, we hand-collect information on market insurance, self protection, and fire accident records. Using the conditional dependency test, we find that firms that purchase market insurance have a greater tendency to put efforts into self protection. Wealso find that firms that put efforts into self protection are less likely to suffer a fireaccident. Furthermore, we find that firms with commercial,fire insurance have a lower chance of suffering a fire accident than those without such insurance. Each of the above three findings jointly supports the
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Conference of American Risk and Insurance Association,
