The Level of Information Asymmetry in Characteristic Items of Property in the Czech Insurance Market

Asymmetry of information is generally solvable on the current Czech insurance market. This article presents a different view of the issue. There is a specific effect of the asymmetry of information on the insurance market. The phenomenon is the concealment of information in the insurance conditions of insurers. The attitude of insurers creates a risk of financial damage of the insured, primarily in the case of an insurance event. The goal of this paper is to evaluate the asymmetry of information in the selected characteristic designated „item of property“ in the area of insurance property, in company insurance against natural hazards in the Czech Republic. The research was carried out up until the date of 1. 9. 2012. This paper is focused on the side of the insurer. The way that insurers inform a company about insurance against natural hazards in the clause “item of property” in the insurance conditions is analysed and evaluated. The valuation of asymmetric information is performed by the method of comparing the standard of information and real information by the insurance conditions. The calculation of the rate of knowledge on the insurance market and the rate of asymmetry information is made. The standard of information is determined on the basis of the analysis and synthesis of the knowledge from insurance practice and legislature, which is valuated in the Czech Republic. The method of sorting is also used. The set of standard information has a direct relation to the risk of the lack of information. This structure is used for the creation of the set of standard information. The result of the paper is the creation of a model of standard insurance conditions in the characteristic called „item of property“, the creation of the method of standard insurance conditions for the valuation of asymmetry information, the review of insurers' knowledge of the Czech insurance market and the creation of specific recommendations for the insurance market for the reduction of information asymmetry.