Advanced Search
MyIDEAS: Login to save this article or follow this journal

Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

Contents:

Author Info

  • Dionne, Georges
  • Gagne, Robert

Abstract

Traditional insurance contracts do not offer protection against the replacement value of a vehicle. A replacement cost endorsement gives the opportunity to get a new vehicle in the case of a total theft or in the case of total destruction of the car in a road accident. This type of protection was introduced in Canada in the late 1980's. It is also offered in France and many insurers in the United States are going to move in that direction. We propose tests that separate moral hazard from adverse selection in the analysis of the effect of this additional protection on car theft. We show that holders of car insurance policies with a replacement cost endorsement have a higher probability of theft near the end of this additional protection (usually 24 months following the acquisition of a new car). Our tests indicate that this result is a form of ex post moral hazard or opportunistic insurance fraud. Copyright 2002 by Kluwer Academic Publishers

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://journals.kluweronline.com/issn/0895-5646/contents
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 24 (2002)
Issue (Month): 3 (May)
Pages: 213-30

as in new window
Handle: RePEc:kap:jrisku:v:24:y:2002:i:3:p:213-30

Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100299

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Picard, Pierre, 1996. "On the design of optimal insurance policies under manipulation of audit cost," CEPREMAP Working Papers (Couverture Orange) 9605, CEPREMAP.
  2. Dionne, G., 1998. "La mesure empirique des problemes d'information," Papers 9833, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  3. Dionne, G. & Gourieroux, C. & Vanasse, C., 1998. "The Informational Content of Household Decisions with Applications to Insurance under Adverse Selection," Papers 9806, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  4. Fortin, Bernard & Lanoie, Paul, 1998. "Effects of Workers' Compensation: A Survey," Cahiers de recherche 9816, Université Laval - Département d'économique.
  5. Bond, Eric W. & Crocker, Keith J., 1997. "Hardball and the soft touch: The economics of optimal insurance contracts with costly state verification and endogenous monitoring costs," Journal of Public Economics, Elsevier, vol. 63(2), pages 239-264, January.
  6. Devlin, R.A., 1988. "Liability Versus No-Fault Automobile Insurance Regimes: An Analysis Of The Experience In Quebec," Working Papers 88126, Wilfrid Laurier University, Department of Economics.
  7. Butler, Richard J & Durbin, David L & Helvacian, Nurhan M, 1996. "Increasing Claims for Soft Tissue Injuries in Workers' Compensation: Cost Shifting and Moral Hazard," Journal of Risk and Uncertainty, Springer, vol. 13(1), pages 73-87, July.
  8. Marcel Boyer & Georges Dionne, 1987. "Description and Analysis of the Quebec Automobile Insurance Plan," Canadian Public Policy, University of Toronto Press, vol. 13(2), pages 181-195, June.
  9. Keith J. Crocker & John Morgan, 1998. "Is Honesty the Best Policy? Curtailing Insurance Fraud through Optimal Incentive Contracts," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 355-375, April.
  10. Boyer, M Martin, 2000. " Insurance Taxation and Insurance Fraud," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(1), pages 101-34.
  11. P. Picard, 1998. "Insurance fraud : theory," THEMA Working Papers 98-26, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  12. Caron, L. & Dionne, G., 1996. "Insurance Fraud Estimation: More Evidence from the Quebec Automobile Insurance Industry," Ecole des Hautes Etudes Commerciales de Montreal- 96-02, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
  13. Dionne, G. & St-Michel, P., 1988. "Workers' Compensation and Moral Hazard," Cahiers de recherche 8831, Universite de Montreal, Departement de sciences economiques.
  14. Fortin, Bernard & Lanoie, Paul, 1992. "Substitution between unemployment insurance and workers' compensation : An analysis applied to the risk of workplace accidents," Journal of Public Economics, Elsevier, vol. 49(3), pages 287-312, December.
  15. Auriol, Emmanuelle & Picard, Pierre M., 1999. "Optimal Industrial Policy," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  16. Cummins, J David & Tennyson, Sharon, 1996. "Moral Hazard in Insurance Claiming: Evidence from Automobile Insurance," Journal of Risk and Uncertainty, Springer, vol. 12(1), pages 29-50, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Georges Dionne & Florence Giuliano & Pierre Picard, 2009. "Optimal Auditing with Scoring: Theory and Application to Insurance Fraud," Management Science, INFORMS, vol. 55(1), pages 58-70, January.
  2. Gollier, Christian, 2007. "The Determinants of the Insurance Demand by Firms," IDEI Working Papers 468, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Raduna, Daniela Viviana & Roman, Mihai Daniel, 2011. "Risk aversion influence on insurance market," MPRA Paper 37725, University Library of Munich, Germany, revised 01 Feb 2012.
  4. G. Dionne & F. Giuliano & P. Picard, 2002. "Optimal auditing for insurance fraud," THEMA Working Papers 2002-32, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  5. Yufei Jin & Roderick Rejesus & Bertis Little, 2005. "Binary choice models for rare events data: a crop insurance fraud application," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 841-848.
  6. Boyer, Martin, 2001. "Les clauses de valeur à neuf sont-elles optimales?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 77(1), pages 53-74, mars.
  7. Pierre Picard, 2012. "Economic Analysis of Insurance Fraud," Working Papers hal-00725561, HAL.
  8. Dionne, G. & Michaud, P.C. & Dahchour, M., 2004. "Separating Moral Hazard from Adverse Selection in Automobile Insurance: Longitudinal Evidence from France," Discussion Paper 2004-79, Tilburg University, Center for Economic Research.
  9. Georges Dionne & Kili C. Wang, 2011. "Does Opportunistic Fraud in Automobile theft Insurance Fluctuate with the Business Cycle ?," Cahiers de recherche 1121, CIRPEE.
  10. M. Dahchour & G. Dionne, 2002. "Pricing of Automobile Insurance Under Asymmetric Information : a Study on Panel Data," THEMA Working Papers 2002-12, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  11. Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
  12. Georges Dionne & Kili Wang, 2013. "Does insurance fraud in automobile theft insurance fluctuate with the business cycle?," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 67-92, August.
  13. Yarmukhamedov, Sherzod, 2013. "Empirical analysis of moral hazard: a study of a vehicle insurance tax reform," Working papers in Transport Economics 2013:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:24:y:2002:i:3:p:213-30. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.