Asymmetric information in secondary insurance markets: Evidence from the life settlements market

Artikel

We use data from a large US life expectancy provider to test for asymmetric information in the secondary life insurance-or life settlements-market. We compare realized lifetimes for a subsample of settled policies relative to all (settled and nonsettled) policies, and find a positive settlement-survival correlation indicating the existence of informational asymmetry between policyholders and investors. Estimates of the 'excess hazard' associated with settling show the effect is temporary and wears off over approximately 8 years. This indicates individuals in our sample possess private information with regards to their near-term survival prospects and make use of it, which has economic consequences for this market and beyond.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Quantitative Economics ; ISSN: 1759-7331 ; Volume: 11 ; Year: 2020 ; Issue: 3 ; Pages: 1143-1175 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Insurance; Insurance Companies; Actuarial Studies ; Demographic Economics: General
• Subject: Asymmetric information ; life settlements ; life expectancy ; secondaryinsurance market

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bauer, Daniel ; Ruß, Jochen ; Zhu, Nan
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2020

Further information

• DOI: doi:10.3982/QE1333
• Handle: http://hdl.handle.net/10419/253590
• Last update: 10.03.2025, 11:44 AM CET