Willingness to Pay for Insurance in Denmark

28 Pages Posted: 19 Feb 2016

See all articles by Jan V. Hansen

Jan V. Hansen

Danish Insurance Association

Rasmus Højbjerg Jacobsen

Copenhagen Business School - Center for Economic and Business Research (CEBR)

Morten I. Lau

Durham Business School

Date Written: March 2016

Abstract

We estimate how much Danish households are willing to pay for auto, home, and house insurance. We use a unique combination of claims data from a large Danish insurance company, measures of individual risk attitudes and discount rates from a field experiment with a representative sample of the adult Danish population, and information on household income and wealth from registers at Statistics Denmark. The results show that the willingness to pay is marginally higher than the actuarially fair value under expected utility theory, but significantly higher under rank‐dependent utility theory, and up to 600 percent higher than the actuarially fair value.

Suggested Citation

Hansen, Jan V. and Jacobsen, Rasmus Højbjerg and Lau, Morten Igel, Willingness to Pay for Insurance in Denmark (March 2016). Journal of Risk and Insurance, Vol. 83, Issue 1, pp. 49-76, 2016, Available at SSRN: https://ssrn.com/abstract=2734468 or http://dx.doi.org/10.1111/j.1539-6975.2013.12011.x

Jan V. Hansen (Contact Author)

Danish Insurance Association ( email )

Denmark

Rasmus Højbjerg Jacobsen

Copenhagen Business School - Center for Economic and Business Research (CEBR) ( email )

Solbjerg Plads 3
Copenhagen, DK-2000
Denmark

Morten Igel Lau

Durham Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

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