Does private information affect the insurance risk?: evidence from the automobile insurance market

Download
Sara Arvidsson

We empirically investigate the effect of policyholders’ private information of risky traffic behavior on automobile insurance coverage and ex post risk. We combine our insurance company’s information with private information data that is not accessible to the insurance company. We show that being unable to reject the null of zero correlation is not necessarily consistent with symmetric information in the automobile insurance market. Our results are twofold: In contrast to much of the previous work we find a positive significant correlation for three groups of policyholders, consistent with the adverse selection prediction. We furthermore find that private information about risky traffic behavior increases ex post risk while it both increases and decreases the demand for extensive insurance. This supports our hypothesis that adverse and propitious is present simultaneously in this market.

MEET US


6
Oct

Open seminar with Mistra SAMS international scientific advisory...

Mistra SAMS international scientific advisory panel (ISAP) is visiting Stockholm, and the program will host an open seminar where the panel members will give talks in their area of expertise.
19-20
Oct

ERPUG 2017

The five year anniversary of  European Road Profile Users' Group (ERPUG) Forum will take place at Ramboll head quarter, Copenhagen, Denmark October 19-20, 2017. 

LATEST NEWS


2017-07-05

Vehicle Driver Monitoring: sleepiness and cognitive load

To prevent road crashes it is important to understand driver related contributing factors, which have been suggested to be the critical reason in 94 per cent of crashes. The overall aim of the project Vehicle Driver Monitoring has been to advance the...


2017-06-29

Tomas Svensson new director-general

Tomas Svensson was today appointed Director-General of VTI. Tomas has been acting Director-General since January 2017. 


2017-05-30

Crash testing bicycles at VTI

For the first time single bicycle crashes have been simulated at the VTI crash safety laboratory.


2017-05-15

A case study exploring firefighters’ and municipal officials’ preparedness for electrical vehicles

A VTI-study presents a social perspective on new vehicle technology. It explores the self-reported preparedness of the fire departments (i.e., rescue services) in Sweden’s three largest cities regarding rescue operations involving electrical vehicles (EVs).


2017-05-02

Pioneering research on and about bicycles at VTI

Under what circumstances might cyclists lose tyre grip? What actions could then be taken to prevent a crash? VTI is currently developing a theoretical model of the behaviour of bicycle tyres during braking and steering in different situations and on different...


2017-05-02

Virtual pedestrians create efficient stations

If more people are to choose sustainable travel, then the public transport stations of the future must be designed so that pedestrians can get where they are going quickly, without congestion or queues. The Swedish Road and Transport Research Institute (VTI)...