Abstract

https://ssrn.com/abstract=2150044
 


 



Asymmetric Information in the Market for Automotive Insurance: Evidence from Germany


Martin Spindler


Max Planck Institute for Social Law and Social Policy; MEA

Joachim K. Winter


Ludwig Maximilian University of Munich

Steffen Hagmayer


HUK Coburg Insurance Group

June 21, 2012

MEA Discussion Paper No. 259-2012

Abstract:     
Asymmetric information is an important phenomenon in insurance markets, but the empirical evidence on the extent of adverse selection and moral hazard is mixed. Because of its implications for pricing, contract design, and regulation, it is crucial to test for asymmetric information in specific insurance markets.

In this paper, we analyse a recent data set on automobile insurance in Germany, the largest such market in Europe. We present and compare a variety of statistical testing procedures. We find that the extent of asymmetric information depends on coverage levels and on the specific risks covered which enhances the previous literature. Within the framework of Chiappori et al. (2006), we also test whether drivers have realistic expectations concerning their loss distribution, and we analyze the market structure.

Number of Pages in PDF File: 32

Keywords: Asymmetric information, automobile insurance, parametric tests, imperfect competition

JEL Classification: D82, C12, G22


Open PDF in Browser Download This Paper

Date posted: September 22, 2012 ; Last revised: October 30, 2012

Suggested Citation

Spindler, Martin and Winter, Joachim K. and Hagmayer, Steffen, Asymmetric Information in the Market for Automotive Insurance: Evidence from Germany (June 21, 2012). MEA Discussion Paper No. 259-2012. Available at SSRN: https://ssrn.com/abstract=2150044 or http://dx.doi.org/10.2139/ssrn.2150044

Contact Information

Martin Spindler (Contact Author)
Max Planck Institute for Social Law and Social Policy ( email )
Amalienstraße 33
München, 80799
Germany
MEA ( email )
Amalienstrasse 33
Munich, 80799
Germany
Joachim K. Winter
Ludwig Maximilian University of Munich ( email )
Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany
Steffen Hagmayer
HUK Coburg Insurance Group ( email )
Coburg
Germany
Feedback to SSRN


Paper statistics
Abstract Views: 680
Downloads: 110
Download Rank: 198,191