IDEAS home Printed from https://ideas.repec.org/a/pal/gpprii/v50y2025i2d10.1057_s41288-023-00310-z.html
   My bibliography  Save this article

Digitalisation and cream skimming adverse selection in the property-casualty insurance industry: evidence from China

Author

Listed:
  • Feiyan Yang

    (Southwestern University of Finance and Economics)

  • Jiahui Ren

    (Southwestern University of Finance and Economics)

  • Changyuan Xia

    (Southwestern University of Finance and Economics)

Abstract

This study examines the potential of digitalisation to mitigate insurers’ vulnerability to cream skimming adverse selection and explores the mechanism underlying this effect. Employing unbalanced panel data of 84 property-casualty insurance companies in China from 2010 to 2020, our investigation reveals that digitalisation reduces insurers’ susceptibility to cream skimming adverse selection, especially among firms located in areas with lower levels of social trust. Digitalised insurers are able to collect a wider variety of customer information, make pricing more effective and therefore achieve lower loss ratios in contrast to their less digitalised rivals. Moreover, we discern a more pronounced impact of digitalisation on companies during their growth stages as compared to their well-established counterparts. Our findings remain robust when subjected to various endogeneity and robustness tests.

Suggested Citation

  • Feiyan Yang & Jiahui Ren & Changyuan Xia, 2025. "Digitalisation and cream skimming adverse selection in the property-casualty insurance industry: evidence from China," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 50(2), pages 302-334, April.
  • Handle: RePEc:pal:gpprii:v:50:y:2025:i:2:d:10.1057_s41288-023-00310-z
    DOI: 10.1057/s41288-023-00310-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41288-023-00310-z
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1057/s41288-023-00310-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:50:y:2025:i:2:d:10.1057_s41288-023-00310-z. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.