Università Cattolica del Sacro Cuore

N. 84 - "The Gains of Ignoring Risk: Insurance with Better Informed Principals" - Laura Abrardi, Luca Colombo and Piero Tedeschi


We study a competitive insurance market in which insurers have an imperfect informative advantage over policyholders. We show that the presence of insurers privately and heterogeneously informed about risk can explain the concentration levels, the persistent pro tability and the pooling of risk observed in some insurance markets. Furthermore, we nd that a lower market concentration may entail an increase in insurance premia.

JEL codes: D43, D82, G22
Keywords: Insurance markets, Asymmetric information, Risk assessment, Market concentration.