Do the Better Insured Cause More Damage? Testing for Asymmetric Information in Car Insurance

39 Pages Posted: 3 Jan 2014

Multiple version iconThere are 2 versions of this paper

Date Written: December 31, 2013

Abstract

This paper tests for the presence of asymmetric information in Dutch car insurance among senior drivers using several non-parametric tests based on conditional-correlation approach. Since asymmetric information implies that more comprehensive coverage is associated with higher risk, we examine whether the better insured have a higher frequency of claims or cause more severe accidents. Using data on claim occurrences, incurred losses and written premiums, and controlling for the insureds' experience rating, we do not find any evidence of asymmetric information in this market.

Keywords: car insurance, asymmetric information, adverse selection, moral hazard, conditional correlation, non-parametric tests

JEL Classification: D82, G22

Suggested Citation

Zavadil, Tibor, Do the Better Insured Cause More Damage? Testing for Asymmetric Information in Car Insurance (December 31, 2013). Available at SSRN: https://ssrn.com/abstract=2373969 or http://dx.doi.org/10.2139/ssrn.2373969

Tibor Zavadil (Contact Author)

Národná banka Slovenska ( email )

Imricha Karvasa 1
813 25 Bratislava
Slovakia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
391
PlumX Metrics