BONUS-MALUS SYSTEM OR PARTIAL COVERAGE TO OPPOSE MORAL HAZARD PROBLEMS

Authors
VANDEBROEK M
Citation
M. Vandebroek, BONUS-MALUS SYSTEM OR PARTIAL COVERAGE TO OPPOSE MORAL HAZARD PROBLEMS, Insurance. Mathematics & economics, 13(1), 1993, pp. 1-5
Citations number
2
Categorie Soggetti
Social Sciences, Mathematical Methods",Economics,"Mathematical, Methods, Social Sciences
Journal title
Insurance. Mathematics & economics → ACNP
ISSN journal
01676687
Volume
13
Issue
1
Year of publication
1993
Pages
1 - 5
Database
ISI
SICI code
0167-6687(1993)13:1<1:BSOPCT>2.0.ZU;2-3
Abstract
The efficiency of bonus-malus systems and partial coverages in prevent ing moral hazard problems is analyzed by solving a stochastic dynamic programming model. By examining the resulting payoffs of both parties involved it is possible to compare insurance contracts in terms of the level of care they induce. It is shown that the principal reason for taking preventive actions is the partial coverage, the bonus and/or ma lus involved being far less decisive.