I know that I don’t know what you do

  • Published on
    22-Feb-2016

  • View
    46

  • Download
    0

DESCRIPTION

I know that I dont know what you do. Informational asymmetry from the insurers point of view Orsolya Rtallr Corvinus University of Budapest. Theoretical background. Informational asymmetry in the insurance market. Competitive market single period (Rotschild and Stiglitz, 1976) - PowerPoint PPT Presentation

Transcript

PowerPoint Presentation

I know that I dont know what you doInformational asymmetry from the insurers point of view

Orsolya RtallrCorvinus University of BudapestTheoretical background TMOP-4.2.2/B-10/1-2010-0023Informational asymmetry in the insurance marketCompetitive market single period(Rotschild and Stiglitz, 1976)Monopol market single period(Stiglitz, 1977)Competitive market multi period(Cooper and Hayes, 1987 and Kuntreuther and Pauly, 1985)Monopol market multi period(Dionne, 1983 and Dionne and Lassere, 1985)

My goal:Making adverse selection visibleAssumptions TMOP-4.2.2/B-10/1-2010-0023General AssumptionsNo influence on the riskInsurance is not mandatoryInsurer is in monopol positionInitial number of policyholdersPolicyholders are not distinguishedInsured asset worth 1Maximum number of losses per year: 1Amount of loss is independent from the number of losses10 period of time

Model structure TMOP-4.2.2/B-10/1-2010-0023Permanent dataContinuous RiskType of RiskDiscrete Risk

Period-dependent dataPolicyholder DummyPresumed RiskLoss DummyAmount of LossActual Risk

A series of simulationsInitial number of policyholders: 1,000Premium principle: net premium principleMaximal risk: 100%Premium tolerance: 5% TMOP-4.2.2/B-10/1-2010-0023A series of simulations TMOP-4.2.2/B-10/1-2010-00237A series of simulations TMOP-4.2.2/B-10/1-2010-00238A series of simulations TMOP-4.2.2/B-10/1-2010-00239A series of simulations TMOP-4.2.2/B-10/1-2010-002310A series of simulations TMOP-4.2.2/B-10/1-2010-002311H4H1H2H3The number of policyholders is decreasing over time.The premium is increasing over time.The cumulative profit for 10 periods is negative. The lower the discrete risk is, the faster the group terminates the contract. Hypotheses TMOP-4.2.2/B-10/1-2010-0023ResultsInitial FrequenciesResultsDistribution of Amount of LossesResultsMoral Hazard TMOP-4.2.2/B-10/1-2010-0023ResultsPolicyholders Risk Assumptions TMOP-4.2.2/B-10/1-2010-0023H1The number of policyholders is decreasing over time.Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023ResultsPolicyholders Risk Assumptions TMOP-4.2.2/B-10/1-2010-0023H1The number of policyholders is decreasing over time.Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023H2The premium is increasing over time.Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023 TMOP-4.2.2/B-10/1-2010-0023H2The premium is increasing over time.Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023H3The cumulative profit for 10 periods is negative. Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023 TMOP-4.2.2/B-10/1-2010-0023H3The cumulative profit for 10 periods is negative. Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023H4The lower the discrete risk is, the faster the group terminates the contract. Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023ResultsInitial FrequenciesH4The lower the discrete risk is, the faster the group terminates the contract. Results of Hypotheses TMOP-4.2.2/B-10/1-2010-0023Conclusions TMOP-4.2.2/B-10/1-2010-0023Adverse selection might have major influences on theNumber of policyholdersPremiumLoss expensesPremium incomeProfitGender directive role of adverse selection is enhancingSimulations as tools for observing adverse selection?To download my paper and model please visit: TMOP-4.2.2/B-10/1-2010-0023https://sites.google.com/site/orsiretaller/kutatas-research

Recommended

View more >