Asymmetric Information Problems in Taiwan's Automobile Insurance Market: The Effect of Policy Design on Loss Characteristics |
| |
| Authors: | Jennifer L Wang |
| |
| Institution: | Jennifer L. Wang is associate professor, Department of Risk Management and Insurance, National Chengchi University, Taiwan;phone: 886-1-8861-3624;fax: 886-1-2939-3864;e-mail: . The author appreciates the helpful comments of the editors and anonymous referees. Financial support for this research from the National Science Council of Taiwan is also gratefully acknowledged. |
| |
| 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. |
| |
| Keywords: | |
|
|
