Title: Adverse selection factors of group injury insurance: evidence from a Taiwanese property-liability insurance company

Authors: Hsu-Hua Lee; Ming-Yuan Hsu; Chen-Ying Lee

Addresses: Graduate Institute of Management Sciences, Tamkang University, No.151, Yingzhuan Rd., Tamsui Dist., New Taipei City 25137, Taiwan ' Graduate Institute of Management Sciences, Tamkang University, No.151, Yingzhuan Rd., Tamsui Dist., New Taipei City 25137, Taiwan ' Department of Insurance and Finance Management, Chihlee University of Technology, No.313, Sec.1,Wunhau Rd., Banciao Dist., New Taipei City, Taiwan

Abstract: The aims of this study are to examine whether high-risk groups tend to choose high insured amounts and to consider the effect of underwriting policy on the reduction of adverse selection. Data for 2009 and 2010 on group injury insurance from a Taiwanese property-liability company is analysed using ordered logistic regression. In this regard, the study uses 11 independent variables to analyse the relationship between variables and adverse selection. The results indicate that eight of the variables have a significant impact on adverse selection and the effect of underwriting is 69%-97%. The findings can be used to establish a sound underwriting system and increase underwriting profits.

Keywords: group injury insurance; adverse selection; advantage selection; ordered logistic regression; decision rules; property liability insurance; underwriting policy; quality management; risk assessment; underwriting risk; Taiwan; high-risk groups.

DOI: 10.1504/IJADS.2016.078193

International Journal of Applied Decision Sciences, 2016 Vol.9 No.1, pp.1 - 16

Received: 20 Mar 2015
Accepted: 23 Dec 2015
Published online: 08 Aug 2016 *

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