Two Simple Models of Insurance Fraud

12 Pages Posted: 8 Dec 2020 Publication Status: Preprint


We show a simple approach to modelling insurance frauds, both ex-ante (for the insured event), in the form of false accidents and staged events, and ex-post, in the form of inflated bills and buildups. Optimal amounts of (under)coverage and excess claims are obtained from the maximizing behavior of policyholders under perfect competition and fraud detection activity by the insurance companies. Numerical results are calculated using plausible parameter assumptions.

Keywords: Insurance; fraud; ex-ante moral hazard; ex-post moral hazard; expected utility

Suggested Citation

Cesari, Riccardo, Two Simple Models of Insurance Fraud. Available at SSRN: https://ssrn.com/abstract=3745223 or http://dx.doi.org/10.2139/ssrn.3745223

Riccardo Cesari (Contact Author)

Università di Bologna ( email )

viale Filopanti,5
Bologna, Bologna 40126
0039512094358 (Phone)
0039512094367 (Fax)

IVASS ( email )

Via del Quirinale, 21
Rome, 00187

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