Optimal Underreporting and Competitive Equilibrium

Zongxia Liang, Jiayu Zhang, Zhou Zhou and Bin Zou

Papers from arXiv.org

Abstract: This paper develops a dynamic insurance market model comprising two competing insurance companies and a continuum of insureds, and examines the interaction between strategic underreporting by the insureds and competitive pricing between the insurance companies under a Bonus-Malus System (BMS) framework. For the first time in an oligopolistic setting, we establish the existence and uniqueness of the insureds' optimal reporting barrier, as well as its continuous dependence on the BMS premiums. For the 2-class BMS case, we prove the existence of Nash equilibrium premium strategies and conduct an extensive sensitivity analysis on the impact of the model parameters on the equilibrium premiums.

Date: 2026-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2601.12655 Latest version (application/pdf)

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:arx:papers:2601.12655

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().