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Wuppermann, Amelie C. (2014): Private information in life insurance, annuity and health insurance markets.
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Economic theory predicts that private information on risks in insurance markets leads to adverse selection. To counterbalance private information insurers collect and use information on applicants to assess their risk and calculate premiums in an underwriting process. Using data from the English Longitudinal Study of Ageing (ELSA) this paper documents that diferences in the information used in underwriting across life insurance, annuity and health insurance markets attenuate private information to diferent extents. The results are in line with - and might help to reconcile - the mixed empirical evidence on adverse selection across these markets.