The Effect of the Introduction of a »Pay Per Use« Option within motor TPL insurance
Languages of publication
In this paper the effects of the introduction of the so called “pay per use” -insurance products are examined. These products collect data of kilometers driven by policy holders. As a result of this data, policy holders can get a refund on the insurance-premium paid. Since there is a positive correlation between mileage and the risk of causing an accident the refund is granted to low-mileage drivers, so in theory the “pay per use” product is more attractive to low-mileage drivers than to long-distance drivers. The authors examine empirical evidence to find out whether or not it is mainly low-mileage-drivers who choose the “pay per use” product. Secondly, the authors examine whether there are other significant differences between characteristics of “pay per use” policy-holders and “traditional” policy- holders. Therefore a random sample of 4,000 car-insurance - clients (2,000 “pay per use” policy- holders and 2,000 “traditional” policy-holders) is reviewed. In addition the effects of the introduction of “pay per use” products are discussed, in case of a selection effect between low- and high -mileage drivers is observed.
- FHWien University of Applied Sciences of WKW, Austria, firstname.lastname@example.org
- FHWien University of Applied Sciences of WKW, Austria, email@example.com
- FHWien University of Applied Sciences of WKW, Austria, firstname.lastname@example.org
- Akerlof G. (1970) The Market for “Lemons”: Quality Uncertainty and the Market mechanism, Quarterly Journal of Economics, Vol. 84, Issue 3, pp. 488–500.
- Backhaus K. et al (2011) Multivariate Analysemethoden, Berlin, Heidelberg, New York: Springer.
- Cohen A. (2005) Asymmetric information and learning in the automobile insurance market, The Review of Economics and Statistics, Vol. 87, Issue 2, pp. 197–207.
- Cohen J. (1988) Statistical Power Analysis for the Behavioral Sciences, New York: Lawrence Erlbaum Associates.
- Kähler W. (2011) Statistische Datenanalyse, Wiesbaden: Vieweg & Teubner.
- Karten W. (1994) Das Einzelrisiko und seine Kalkulation, in: W. Große et al., Versicherungsenzyklopädie, Wiesbaden: Gabler.
- Litman T. (1997) Distance-based insurance as a TDM strategy, Transportation Quarterly, Vol. 51, Issue 3, pp. 119–137.
- Litman T. (2005) Pay-As-You-Drive Pricing and Insurance Regulatory Objectives, Journal of Insurance Regulation, Vol. 23, Issue 3, pp. 23–53.
- Mehring J. (1962) Die Schadenstruktur in der Kraftfahrt-Haftpflichtversicherung von Personenwagen, Blätter der DGVFM, Vol. 6, Issue 1, pp. 23–41.
- Rothschild M., Stiglitz J. (1976) Equilibrium in competitive Insurance Markets: An Essay on the Economics of imperfect Information, Quarterly Journal of Economics, Vol. 90, Issue 4, pp. 630–649.
- Spence M. (1973) Job Market Signaling, Quarterly Journal of Economics, Vol. 87, Issue 3, pp. 355–374.
Publication order reference