Adverse Selection in Reinsurance Markets
Authors: James R. GARVEN (James_Garven@baylor.edu) and Martin F. GRACE (mgrace@gsu.edu)
File Format: Adobe Acrobat Portable Document Format
ABSTRACT. The reinsurance literature has a rich theoretical heritage, and in recent years a number of
important empirical contributions have been made. This paper adds to that literature by testing Jean-Baptiste
and Santomero's (2000) adverse selection hypotheses after controlling for factors that are known from
previous studies to influence the demand for reinsurance. Our tests involve a data panel consisting of U.S.
property-liability insurance firms which reported to the National Association of Insurance Commissioners
(NAIC) during the period 1995-2000. Journal of Economic Literature Classification Numbers: G22, G13, L15,
D81.
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