Testing for Moral Hazard in Reinsurance Markets
نویسنده
چکیده
TESTING FOR MORAL HAZARD IN REINSURANCE MARKETS Zhiqiang Yan ABSTRACT This paper tests for the existence of residual moral hazard in the three largest reinsurance markets in the United States for the period 1995-2000, and finds that (1) residual moral hazard does not exist in private passenger auto liability, product liability and overall reinsurance markets; (2) residual moral hazard might exist in homeowners reinsurance market; and (3) experience rating, retention limit, and long-term contracting relationship are either not used by reinsurers or not effective in controlling loss experience of reinsurance over this period of time.
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