This paper tests for regulation-induced adverse selection in the Massachusetts automobile insurance market during the regulated period 1990-2005. The paper demonstrates the application of the Poterba-Finkelstein (2014) unused-observables test for adverse selection in a regulated insurance market...

We examine the optimal claims settlement strategy for a liability insurer when claimants can permanently misrepresent their loss by engaging in costly claims falsification. In this environment claims auditing is not a possible deterrent to fraud, and the settlement strategy consists of an...