Centro de Documentacion de Fundación MAPFRE - Do customers opt for insurance products with a simplified loss settlement logic?

MAP20260003351

Do customers opt for insurance products with a simplified loss settlement logic? / Laurenz Hommel and Hato Schmeiser

Sumario: The article examines whether consumers are willing to purchase insurance products with a simplified loss settlement logic (SLSL), a type of policy that reduces underwriting and claims-handling costs but introduces basis risk due to potential discrepancies between the actual loss and the indemnity paid. Using a theoretical model and an experiment involving nearly one thousand participants in the United States, the study analyzes willingness to pay, the impact of basis risk, and the role of risk aversion. The results show no significant differences in willingness to pay between traditional insurance products and SLSL innovations, although higher basis risk increases the subjective perception of that risk. The study concludes that these products may be tested in the market, but should be introduced cautiously because of the potential risk that policyholders may misunderstand the implications of basis risk, which could lead to reputational and legal challenges

En: Risk management & insurance review. - Malden, MA : The American Risk and Insurance Association by Blackwell Publishing, 1999- = ISSN 1098-1616. - 23/12/2025 Volume 28 Issue 4 - 2025 , p. 534 - 587

1. Demanda de seguros . 2. Diseño de productos . 3. Property-casualty . 4. Innovación aseguradora . 5. Mercado de seguros . I. Schmeiser, Hato . II. American Risk and Insurance Association . III. Título.