Risk classification and the balance of information in insurance; an alternative interpretation of the evidence

Casper H. de Jong

Risk Management and Insurance Review, 2021, vol. 24, issue 4, 445-461

Abstract: The purpose of this paper is to enhance understanding of the factors influencing the balance of information between policyholder and insurer. The emphasis is on the effects of risk classification. Starting from a theoretical scenario in which efficient risk classification prevents adverse selection, impediments to such risk classification and the effects of differences between insurers in this respect are being discussed. This approach offers both a more realistic and a simpler explanation for the presence of adverse selection.

Date: 2021
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https://doi.org/10.1111/rmir.12198

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Persistent link: https://EconPapers.repec.org/RePEc:bla:rmgtin:v:24:y:2021:i:4:p:445-461

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