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Insurance loss coverage under restricted risk classification : the case of iso-elastic demand

Recurso electrónico / Electronic resource
Registro MARC
Tag12Valor
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001  MAP20160024166
003  MAP
005  20160809145738.0
008  160808e20160502usa|||p |0|||b|eng d
040  ‎$a‎MAP‎$b‎spa‎$d‎MAP
084  ‎$a‎6
24500‎$a‎Insurance loss coverage under restricted risk classification‎$b‎: the case of iso-elastic demand‎$c‎Mingjie Hao... [et al.]
520  ‎$a‎This paper investigates equilibrium in an insurance market where risk classification is restricted. Insurance demand is characterised by an iso-elastic function with a single elasticity parameter. We characterise the equilibrium by three quantities: equilibrium premium; level of adverse selection (in the economist's sense); and loss coverage, defined as the expected population losses compensated by insurance. We consider both equal elasticities for high and low risk-groups, and then different elasticities. In the equal elasticities case, adverse selection is always higher under pooling than under risk-differentiated premiums, while loss coverage first increases and then decreases with demand elasticity. By the way, it is argues that loss coverage represents the efficacy of insurance for the whole population; and therefore that if demand elasticity is sufficiently low, adverse selection is not always a bad thing
7001 ‎$0‎MAPA20160009828‎$a‎Hao, Mingjie
7730 ‎$w‎MAP20077000420‎$t‎Astin bulletin‎$d‎Belgium : ASTIN and AFIR Sections of the International Actuarial Association‎$x‎0515-0361‎$g‎02/05/2016 Volumen 46 Número 2 - mayo 2016 , p. 265-291