The gains of ignoring risk: Insurance with better informed principals

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.

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Year of publication:	2019
Authors:	Abrardi, Laura ; Colombo, Luca ; Tedeschi, Piero
Publisher:	Milano : Università Cattolica del Sacro Cuore, Dipartimento di Economia e Finanza (DISCE)
Subject:	Insurance markets \| Asymmetric information \| Risk assessment \| Market concentration

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Series:	Working Paper ; 84
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	1671875397 [GVK] hdl:10419/225056 [Handle]
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; D82 - Asymmetric and Private Information ; G22 - Insurance; Insurance Companies
Source:	EconStor

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