Is the market classification of risk always efficient? evidence from German third party motor insurance

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Authors

This paper studies the empirical effects of risk classification in the mandatory thirdparty motor insurance of Germany following the European Union’s directive to deregulate insurance tariffs of 1994. We find evidence that inefficient risk categories had been selected while potentially efficient information was dismissed. Risk classification did generally not improve the efficiency of contracting or the composition of insureds in this market. These findings are partly explained by the continuing existence of institutional restraints in this market such as compulsory fixed coverage and unitary owner insurance.
Original languageEnglish
Place of PublicationLüneburg
PublisherInstitut für Volkswirtschaftslehre der Universität Lüneburg
Number of pages29
Publication statusPublished - 01.03.2005

    Research areas

  • Economics - Automobile Insurance, Risk Classification, Market Efficiency

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