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| Author: | Dionne, G. Gagne, R. |
| Title: | Deductible contracts against fraudulent claims: Evidence from automobile insurance |
| Journal: | Review of Economics and Statistics
2001 : MAY, VOL. 83:2, p. 290-301 |
| Index terms: | CONTRACTS INSURANCE ACCIDENT INSURANCE |
| Language: | eng |
| Abstract: | The object of this study is to verify how straight deductible contracts may affect the equilibrium level of falsification in automobile insurance. A higher deductible may create incentives to fraud or cheat, particularly when the insured anticipates that the claim has a small probability of being audited. To verify this proposition, the authors estimate a loss equation for which one of the determinants is the amount of the deductible, using a data set of claims filed for damages following an automobile accident with twenty insurance companies in Quebec in 1992. To isolate the fraud effect related to the presence of a deductible in the contract, the authors jointly estimate a loss equation and a threshold equation. |
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