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Evidence of Adverse Selection in Automobile Insurance Markets

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Author Info

  • Georges Dionne

    (Crest)

  • Christian Gourieroux

    (Crest)

  • Charles Vanasse

    (Crest)

Abstract

In this paper, we propose an empirical analysis of the presence of adverse selection in an insurance market. We first present a theoratical model of a market with adverse selection and we introduce different issues related to transaction costs, accident costs, risk aversion and moral hazard. We then discuss an econometric modeling based on latent variables and we derive its relationship with specification tests that may be useful to isolate the presence of adverse selection in the portfolio of an insurer.

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Bibliographic Info

Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 98-24.

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Date of creation: 1998
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Handle: RePEc:crs:wpaper:98-24

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Cited by:
  1. Chiappori, P.A. & Durand, F. & Geoffard, P.Y., 1998. "Moral Hazard and the Demand for Physician Services: First Lessons from a French Natural Experiment," DELTA Working Papers 98-05, DELTA (Ecole normale supérieure).
  2. Gourieroux, C. & Jasiak, J., 2004. "Heterogeneous INAR(1) model with application to car insurance," Insurance: Mathematics and Economics, Elsevier, vol. 34(2), pages 177-192, April.
  3. Jose Antonio Ordaz & Maria del Carmen Melgar & M. Kazim Khan, 2010. "Use and Extension of Count Data Models in the Determination of Relevant Factors for Claims in the Automobile Insurance Sector," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 119-138.
  4. Pierre André Chiappori & Bernard Salanié, 2002. "Testing Contract Theory: A Survey of Some Recent Work," CESifo Working Paper Series 738, CESifo Group Munich.
  5. Dionne, Georges, 1998. "La mesure empirique des problèmes d’information," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(4), pages 585-606, décembre.
  6. G. Dionne & C. Vanasse, 1997. "Une évaluation empirique de la nouvelle tarification de l'assurance automobile (1992) au Québec," THEMA Working Papers 97-22, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. G. Dionne & M. Maurice & J. Pinquet & C. Vanasse, 2001. "The Role of Memory in Long-Term Contracting with Moral Hazard : Empirical Evidence in Automobile Insurance," THEMA Working Papers 2001-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  8. María del Carmen Melgar, José Antonio Ordaz, 2010. "The Utility of Zero-Inflated Models in the Estimation of the Number of Accidents in the Automobile Insurance Industry," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 2, pages 181-194.
  9. Jose Antonio Ordaz, Maria del Carmen Melgar, M. Kazim Khan, 2011. "An Analysis of Spanish Accidents in Automobile Insurance: The Use of the Probit Model and Theoretical Potential of Other Econometric Tools," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 6, pages 117-134.
  10. Makki, Shiva S. & Somwaru, Agapi, 2002. "Asymmetric Information In Cotton Insurance Markets: Evidence From Texas," 2002 Annual meeting, July 28-31, Long Beach, CA 19827, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Georges Dionne & Nathalie Fombaron & Neil Doherty, 2012. "Adverse Selection in Insurance Contracting," Cahiers de recherche 1231, CIRPEE.
  12. 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.

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