Do insurers adjust prices for the adoption of loss prevention technologies? Evidence from Danish municipal contracts

Simon Sølvsten and Brooks Kaiser

Risk Management and Insurance Review, 2023, vol. 26, issue 1, 57-82

Abstract: Using data from 40 Danish municipalities on building characteristics, loss prevention technologies, insurance claims, and insurance bids from 2008 to 2019, we investigate whether and how loss prevention technologies influenced contract prices. The insurance bids cover a variety of municipal buildings across a range of risks including fire, water leakage, and building security as well as structure detection and alarm systems. The study shows that the magnitude of historical claims may affect both pricing offers and interest in loss prevention technologies. We do not find that loss prevention technologies have any significant influence on contract price. This suggests inefficiencies in the market from imperfect information.

Date: 2023
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https://doi.org/10.1111/rmir.12231

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Persistent link: https://EconPapers.repec.org/RePEc:bla:rmgtin:v:26:y:2023:i:1:p:57-82

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