Naslov
Do people drive safer when accidents are more expensive : Testing for moral hazard in experience rating schemes

Autori
Vukina, Tomislav ; Nestić, Danijel

Izvornik
Transportation research part a-policy and practice (0965-8564) 71 (2015); 46-58

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
Asymmetric information; Incentives; Road safety; Insurance

Sažetak
Using individual policies and claims data from the Croatian mandatory motor insurance we test the theoretical proposition that under moral hazard, experience rated pricing scheme should generate the negative state dependence in claims, i.e. that drivers should drive more safely after they had an accident. The empirical challenge in these tests is to disentangle the state dependence from unobserved heterogeneity. We propose a simple approach based on the explicit reliance on the cost of future accidents function which is used to filter out the pure incentives effect, whereas the bonus-malus scale is used to control for pure heterogeneity. Our results confirm the existence of negative dependence in claims indicating the presence of significant moral hazard effect. Increasing a 3-year cost of having an accident by approximately US$20 decreases the probability of having an accident by 6.5%.

Izvorni jezik
Engleski

Znanstvena područja
Tehnologija prometa i transport, Ekonomija

POVEZANOST RADA