Findings from Peking University Update Knowledge of Risk Management (Information Asymmetry, Ex Ante Moral Hazard, and Uninsurable Risk In Liability Coverage: Evidence From China’s Automobile Insurance Market)

2021 AUG 04 (NewsRx) -- By a News Reporter-Staff News Editor at China Business Day -- Fresh data on Risk Management are presented in a new report. According to news reporting from Beijing, People’s Republic of China, by NewsRx journalists, research stated, “We make use of a unique data set to test for information asymmetry, as well as distinguish ex ante moral hazard from adverse selection in different types of third-party liability claims in automobile insurance policies: that is, those with bodily injury (BI) versus those with only property damage (PD). We find that the degree of information asymmetry is higher in liability claims with BI than those with only PD.”

Financial supporters for this research include Young faculty research seed fund of School of Economics, Peking University, National Key Research and Development Program of China, National Natural Science Foundation of China (NSFC).

The news correspondents obtained a quote from the research from Peking University, “Yet, the ex ante moral hazard only exists in liability claims with PD. We use a theoretical model to propose that the difference we find between the two types of claims in ex ante moral hazard is related to uninsurable risk embedded in BI claims. We confirm this finding in another sensitivity test comparing claims from new cars and nonnew cars.”

According to the news reporters, the research concluded: “Altogether, these results suggest policy reforms leading to a better pricing mechanism in the automobile insurance industry in China.”

This research has been peer-reviewed.

For more information on this research see: Information Asymmetry, Ex Ante Moral Hazard, and Uninsurable Risk In Liability Coverage: Evidence From China’s Automobile Insurance Market. Journal of Risk & Insurance, 2021. Journal of Risk & Insurance can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA. (Wiley-Blackwell - http://www.wiley.com/; Journal of Risk & Insurance - http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6975)

Our news journalists report that additional information may be obtained by contacting Yi Yao, Peking University, School of Economics, Institute for Global Health and Development, Dept Risk Management & Insurance, Yiheyuan Rd, Beijing 100871, People’s Republic of China. Additional authors for this research include Hao Zheng, Yinglu Deng and Feng Gao.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1111/jori.12352. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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