Centro de Documentación de Fundación MAPFRE - The Influence of sellers on contract choice: evidence from flood insurance

Notas: Sumario: We examine the ability of insurers to influence the coverage limit decisions of 180,000 households in the National Flood Insurance Program. In this program, private insurers sell identical flood contracts at identical rates and bear no risk of paying claims. About 12 percent of new policyholders overinsure, selecting a coverage limit that exceeds their home's estimated replacement cost. Overinsuring is expensive relative to expected loss, making it difficult to explain with standard decision-making models. The rate of overinsuring differs substantially across insurers, ranging from zero to one-third of new policies. Insurer effects on the likelihood of overinsuring are statistically significant after controlling for the policyholder's characteristics. Additionally, some insurers seem to encourage households to overinsure in percentage terms (e.g., buy 110 percent of replacement cost) while others encourage rounding up in dollars (e.g., to the next $10,000).We find that insurers' distribution systems and commission rates influence whether their policyholders overinsure.Registros relacionados: En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 01/06/2020 Volumen 87 Número 2 - junio 2020 , p. 523-557Materia / lugar / evento: Inundaciones Seguro de riesgos extraordinarios Riesgos de la naturaleza Empresas de seguros Contrato de seguro Coberturas Modelos probabílisticos Análisis estadístico Otros autores: Ragin, Marc A,
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