Splitting Risks in Insurance Markets With Adverse Selection

Pierre Picard

Journal of Risk & Insurance, 2020, vol. 87, issue 4, 997-1033

Abstract: We characterize the design of insurance schemes when policyholders face several insurable risks in a context of adverse selection. Splitting risks emerges as a feature of second‐best Pareto optimality. This may take the form of risk‐specific contracts, or of contracts where risks are bundled but subject to differential coverage rules, such as risk‐specific copayments combined with a deductible or a cap on coverage.

Date: 2020
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Citations: View citations in EconPapers (3)

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https://doi.org/10.1111/jori.12278

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Working Paper: Splitting Risks in Insurance Markets With Adverse Selection (2017)
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