Black Boxes and Market Efficiency: A First Estimate in the Italian Motor-Vehicle Insurance Market

European Journal of Law and Economics, 49, 455-472, 2020

Posted: 2 Jul 2020

See all articles by Cosimo Magazzino

Cosimo Magazzino

University of Rome III; Royal Economic Society; Italian Economic Association

Donatella Porrini

University of Salento - Department of Economics and Mathematics and Statistics

Giulio Fusco

affiliation not provided to SSRN

Date Written: 2020

Abstract

The paper addresses the research question of whether black boxes affect the market efficiency, particularly by reducing the level of premiums. The case analyzed is the Italian motor-vehicle insurance market, characterized by the greatest amount of black boxes in the world as a consequence of regulatory interventions that fostered the spread of these kinds of devices. Particularly, using the data provided by the Italian Insurance Authority (IVASS), we show a specific relation between the increasing number of these devices and the decreasing trend in average premium. Conclusive remarks outline that in the near future this efficiency effect may increase because of the specific use of information derived from the black box that reveals the behaviors of the drivers and allows for innovative ways of individually profiling the insurance policies.

Keywords: Black Box, Insurance Market, Risk Classification

JEL Classification: G22, K20, L51

Suggested Citation

Magazzino, Cosimo and Porrini, Donatella and Fusco, Giulio, Black Boxes and Market Efficiency: A First Estimate in the Italian Motor-Vehicle Insurance Market (2020). European Journal of Law and Economics, 49, 455-472, 2020, Available at SSRN: https://ssrn.com/abstract=3623850

Cosimo Magazzino (Contact Author)

University of Rome III ( email )

Via Ostiense 139
Rome, RM 00154
Italy

HOME PAGE: http://scienzepolitiche.uniroma3.it/cmagazzino/

Royal Economic Society ( email )

London
United Kingdom

Italian Economic Association ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy

HOME PAGE: http://www.siecon.org/online/en/

Donatella Porrini

University of Salento - Department of Economics and Mathematics and Statistics ( email )

Piazza Tancredi, n7
Lecce, 73100
Italy

Giulio Fusco

affiliation not provided to SSRN

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

Paper statistics

Abstract Views
112
PlumX Metrics