publication . Thesis . 2017

Insurance loss coverage under restricted risk classification

Hao, Mingjie; Radfall Charitable Trust;
Open Access English
  • Published: 01 Jul 2017
  • Country: United States
Abstract
Insurers hope to make profit through pooling policies from a large number of individuals. Unless the risk in question is similar for all potential customers, an insurer is exposed to the possibility of adverse selection by attracting only high-risk individuals. To counter this, insurers have traditionally employed underwriting principles, identifying suitable risk factors to subdivide their potential customers into homogeneous risk groups, based on which risk-related premiums can be charged. \ud \ud In reality, however, insurers may not have all the information reflecting individuals' risks due to information asymmetry or restrictions on using certain risk facto...
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