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Asymmetric Information Problems in Taiwan's Automobile Insurance Market: The Effect of Policy Design on Loss Characteristics

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  • Jennifer L. Wang

Abstract

This article investigates asymmetric information problems for the automobile insurance market in Taiwan. Using panel data for the comprehensive automobile insurance coverage from 1995 to 1999, this article analyzes how types of coverage, deductible amounts, and experience ratings have affected the adverse selection and moral hazard problems in Taiwan's automobile insurance market. The empirical results provide partial evidence to demonstrate that the loss frequency and loss ratio were reduced by the addition of self‐selection mechanisms in policies with different levels of coverage. In addition, the deductible amounts, experience ratings, and better control of underwriting and claims processing were shown possibly to have decreased potential losses from adverse selection and moral hazard problems.

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  • Jennifer L. Wang, 2004. "Asymmetric Information Problems in Taiwan's Automobile Insurance Market: The Effect of Policy Design on Loss Characteristics," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 7(1), pages 53-71, March.
    • Handle: RePEc:bla:rmgtin:v:7:y:2004:i:1:p:53-71
    DOI: j.1098-1616.2004.00036.x
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    File URL: https://doi.org/10.1111/j.1098-1616.2004.00036.x
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    References listed on IDEAS

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    Cited by:

    1. Bo Qu & Li Wei & Ping Wei, 2018. "An Empirical Investigation of Asymmetric Information in China’s Automobile Insurance Market," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(3), pages 520-538, July.
    2. Wei‐Jin Wu & Chu‐Shiu Li & Sheng‐Chang Peng, 2020. "The relationships between vehicle characteristics and automobile accidents," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 23(4), pages 331-377, December.
    3. Ming-Jyh Wang & Chieh-Hua Wen & Lawrence W Lan, 2010. "Modelling Different Types of Bundled Automobile Insurance Choice Behaviour: The Case of Taiwan*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 35(2), pages 290-308, April.

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