Insurance design and arson-type risks

• Tác giả: Jean-Gabriel Lauzier
• Ngôn ngữ: eng
• Ký hiệu phân loại: 368.1 *Insurance against damage to and loss of property
• Thông tin xuất bản: 2021
• Bộ sưu tập: Báo, Tạp chí
• ID: 168378

Tóm tắt

We design the insurance contract when the insurer faces arson-type risks. The optimal contract must be manipulation-proof. It is therefore continuous, it has a bounded slope, and it satisfies the no-sabotage condition when arson-type actions are free. Any contract that mixes a deductible, coinsurance and an upper limit is manipulation-proof. We also show that the ability to perform arson-type actions reduces the insured's welfare as less coverage is offered in equilibrium.