Tax Sharing in Insurance Markets: A Useful Parameterization

Christelle Viauroux

Journal of Risk & Insurance, 2014, vol. 81, issue 4, 907-942

Abstract: type="main" xml:lang="en">

We use a principal–agent framework to evaluate the economic impacts of imposing a tax on insurance payment in presence of moral hazard using a Gamma conditional distribution of losses. Our results show that any tax paid by the insured would lower his effort to prevent loss, hence increasing insurance payments and decreasing profits. This result is reinforced as the insured becomes more risk averse unless the distribution of losses is uniform. We find that any decrease in the insurer's tax share would generate an overall decrease in welfare unless the insured characteristics prevent him from reacting to the policy.

Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/ (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:81:y:2014:i:4:p:907-942

Ordering information: This journal article can be ordered from
http://www.wiley.com/bw/subs.asp?ref=0022-4367

Access Statistics for this article

Journal of Risk & Insurance is currently edited by Joan T. Schmit

More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().