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Asymmetric Information in Automobile Insurance: Evidence From Driving Behavior

Author

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  • Alois Geyer
  • Daniela Kremslehner
  • Alexander Muermann

Abstract

Based on a unique data set of driving behavior we test whether private information in driving characteristics has significant effects on contract choice and risk in automobile insurance. We define a driving factor based on overall distance driven, number of car rides, and speeding. Using local weather conditions, we account for the endogeneity of the driving factor. While this driving factor has an effect on risk, there is no significant evidence for selection effects in the level of third‐party liability and first‐party insurance coverage.

Suggested Citation

  • Alois Geyer & Daniela Kremslehner & Alexander Muermann, 2020. "Asymmetric Information in Automobile Insurance: Evidence From Driving Behavior," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 969-995, December.
    • Handle: RePEc:bla:jrinsu:v:87:y:2020:i:4:p:969-995
    DOI: 10.1111/jori.12279
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    3. Montserrat Guillen & Jens Perch Nielsen & Ana M. Pérez‐Marín, 2021. "Near‐miss telematics in motor insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(3), pages 569-589, September.

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