Estimation of moral hazard in the car insurance market of the state of Pernambuco
DOI:
https://doi.org/10.5902/141465093467Keywords:
Probit model, Insurance of automobile and moral hazardAbstract
The goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context. We also argue that in-surance data are particularly well suited to such empirical investigations. To illustrate this claim we use data of Secretary of Defense Social (SDS-PE), Department of Transit (Detran-PE) and the Association of Insurers of the State (Sindiseg-PE) to investigate the extent of asymmetric information in the Pernambuco market for automobile insurance it was used the model Probit. The results demonstrated the existence of moral hazard in the three scenarios. For the situation of robbery or theft of automobile the result showed that there are 2.29 more robberies of automobile insured than non-insured. In the third scenario the likelihood of finding an automobile insured is 2.20 lower in relation to the car without insurance.
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