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

• 成果类型: Article
• 署名作者: Bauer, Daniel; Russ, Jochen; Zhu, Nan
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; Ulm University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: QUANTITATIVE ECONOMICS
• ISSN/ISSBN: 1759-7323
• DOI: 10.3982/QE1333
• 发表日期: 2020
• 页码: 1143-1175
• 关键词: Asymmetric information; life settlements; life expectancy; secondary insurance market

摘要

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 non-settled) 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.