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The Gains of Ignoring Risk: Insurance with Better Informed Principals

Laura Abrardi, Luca Colombo () and Piero Tedeschi

No def084, DISCE - Working Papers del Dipartimento di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: We study a competitive insurance market in which insurers have an imperfect informative advantage over policyholders. We show that the presence of insurers privately and heterogeneously informed about risk can explain the concentration levels, the persistent profitability and the pooling of risk observed in some insurance markets. Furthermore, we find that a lower market concentration may entail an increase in insurance premia

Keywords: Insurance markets; Asymmetric information; Risk assessment; Market concentration. (search for similar items in EconPapers)
JEL-codes: D43 D82 G22 (search for similar items in EconPapers)
Pages: 75
Date: 2019-07
New Economics Papers: this item is included in nep-agr, nep-com, nep-ias, nep-mic and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:ctc:serie1:def084

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