Insuring non-verifiable losses

Neil A. Doherty, Christian Laux and Alexander Muermann

No 2011/31, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: Insurance contracts are often complex and difficult to verify outside the insurance relation. We show that standard one-period insurance policies with an upper limit and a deductible are the optimal incentive-compatible contracts in a competitive market with repeated interaction. Optimal group insurance policies involve a joint upper limit but individual deductibles and insurance brokers can play a role implementing such contracts for the group of clients. Our model provides new insights and predictions about the determinants of insurance.

Keywords: Deductible Insurance; Upper Limit; Implicit Insurance Contracts; Insurance Brokers (search for similar items in EconPapers)
JEL-codes: D6 G22 L14 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Insuring Nonverifiable Losses (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:201131

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