Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

doi:10.1023/A:1015683401986

Paper

Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

Published 2000 · G. Dionne, R. Gagné

Journal of Risk and Uncertainty

Q1 SJR score

74

Citations

4

Influential Citations

Full textSemantic Scholar

Abstract

Traditional insurance contracts do not offer protection against the replacement value of a vehicle. A replacement cost endorsement gives the opportunity to get a new vehicle in the case of a total theft or in the case of total destruction of the car in a road accident. This type of protection was introduced in Canada in the late 1980's. It is also offered in France and many insurers in the United States are going to move in that direction. We propose tests that separate moral hazard from adverse selection in the analysis of the effect of this additional protection on car theft. We show that holders of car insurance policies with a replacement cost endorsement have a higher probability of theft near the end of this additional protection (usually 24 months following the acquisition of a new car). Our tests indicate that this result is a form of ex post moral hazard or opportunistic insurance fraud.

Highly Cited

Study Snapshot

Holders of car insurance policies with a replacement cost endorsement have a higher probability of theft near the end of this additional protection, likely due to ex post moral hazard or opportunistic insurance fraud.

PopulationOlder adults (50-71 years)

Sample size24

MethodsObservational

OutcomesBody Mass Index projections

ResultsSocial networks mitigate obesity in older groups.

Paper

Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

References

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Citations

Bundled insurance coverage and asymmetric information: Claim patterns of automobile theft insurance in Taiwan

Policyholders with only automobile theft coverage have a significantly higher claim probability than those with bundled coverage, and car brands like Mazda, BMW, and Toyota are associated with higher claim probabilities.

IMPACT OF FRAUDS ON THE FINANCIAL PER-FORMANCE OF INSURANCE COMPANIES IN INDIA

Insurance policy scams in India cost the industry an estimated 8% of its income, reducing the ROA and success percentage of insurance providers.

Pricing Moral Hazard in Residential Properties: The Impact of Sinkhole Claims on House Prices

Sinkhole insurance claims negatively impact house prices for both affected and neighboring properties, leading to a price discount even after the sinkhole has been remediated.

A Novel Method for Mining Abnormal Expenses in Social Medical Insurance

This paper proposes an effective fraud detection method for medical insurance reimbursement processes, achieving good accuracy and performance advantages as data size increases.

Switching motivation and moral hazard: evidence from automobile physical damage insurance in Taiwan

Early switchers to a new insurer in Taiwan's automobile physical damage insurance market are more likely to file a claim in the last policy month, highlighting the need for insurers to address this issue.

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Consumers perceive insurance fraud differently, with some considering it acceptable and justifiable, while others consider it acceptable but justified when restoring justice.

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