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Demographic Factors and Price Distortions in Insurance

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Listed:
  • Ron Cheung
  • Cassandra R. Cole
  • David A. Macpherson
  • Kathleen A. McCullough
  • Charles Nyce

Abstract

Few papers have analyzed the potential linkages between price distortions and the specific demographic and political traits of customers. The existence of price distortions may have adverse and potentially unintended impacts on certain demographic groups, leading to significant public policy concerns. The current study uses census tract data and rating factors to examine age, income, and race demographics in an effort to determine if any subgroups of the population are adversely impacted by the price distortions of property insurance. The results suggest that Hispanics, lower income households, and specific age groups pay relatively more for insurance coverage than comparison groups.

Suggested Citation

  • Ron Cheung & Cassandra R. Cole & David A. Macpherson & Kathleen A. McCullough & Charles Nyce, 2015. "Demographic Factors and Price Distortions in Insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 18(1), pages 1-28, March.
  • Handle: RePEc:bla:rmgtin:v:18:y:2015:i:1:p:1-28
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    File URL: http://hdl.handle.net/10.1111/rmir.12027
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    References listed on IDEAS

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