Analyzing the Demand for Deductible Insurance

Jack Meyer () and Michael B Ormiston

Journal of Risk and Uncertainty, 1999, vol. 18, issue 3, 223-30

Abstract: This paper investigates aspects of insurance demand related to deductible insurance. In particular, an important issue concerning analysis of the optimal deductible level is resolved. A simple sufficient restriction on the pricing of insurance is given which ensures that the second order condition for choosing the expected utility maximizing deductible level is met for any risk averse decision maker. This restriction is stated and its sufficiency is demonstrated using the level of expected indemnification rather than the level of the deductible as the choice variable in the decision model. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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