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Insurance fraud in a Rothschild-Stiglitz world
Recurso electrónico / Electronic resource
MAP20200009337
Martin Boyer, M. ‌
Insurance fraud in a Rothschild-Stiglitz world / M. Martin Boyer, Richard Peter
Sumario: In this article, we model a competitive insurance market where policyholders privately have information about their probability of accident ex ante and know the state of the world ex post.We combine costly state verification without commitment and arguments from insurance contracting under adverse selection to characterize the resulting allocations. Insurance fraud convexifies the insurer's zero expected profit condition, which can lead to complete unraveling with low risks dropping out of the market. The standard case, however, involves rationing of low risks, which raises their probability of fraud and their success rate when committing it. As a result, adverse selection increases fraud in the economy. We also show that cross-subsidization from low risks to high risks mitigates the fraud externality. Our results highlight that adverse selection and insurance fraud interact in nontrivial ways and have the potential to aggravate each other
En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 02/03/2020 Volumen 87 Número 1 - marzo 2020 , p. 117-142
1. Fraude en el seguro ‌. 2. Mercado de seguros ‌. 3. Administración de la empresa de seguros ‌. 4. Modelos matemáticos ‌. 5. Cálculo actuarial ‌. 6. Fraude ‌. I. Peter, Richard ‌. II. Título.