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Risk Screening in Digital Insurance Distribution: Evidence and Explanations
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class="card"> <div class="card-body"><strong>Paper Count:</strong> 87353</div> </div> </div> </div> <div class="card publication-listing mt-3 mb-3"> <h5 class="card-header" style="font-size:.9rem">Risk Screening in Digital Insurance Distribution: Evidence and Explanations</h5> <div class="card-body"> <p class="card-text"><strong>Authors:</strong> <a href="https://publications.waset.org/abstracts/search?q=Finbarr%20Murphy">Finbarr Murphy</a>, <a href="https://publications.waset.org/abstracts/search?q=Wei%20Xu"> Wei Xu</a>, <a href="https://publications.waset.org/abstracts/search?q=Xian%20Xu"> Xian Xu</a> </p> <p class="card-text"><strong>Abstract:</strong></p> The embedding of digital technologies in the global economy has attracted increasing attention from economists. With a large and detailed dataset, this study examines the specific case where consumers have a choice between offline and digital channels in the context of insurance purchases. We find that digital channels screen consumers with lower unobserved risk. For the term life, endowment, and disease insurance products, the average risk of the policies purchased through digital channels was 75%, 21%, and 31%, respectively, lower than those purchased offline. As a consequence, the lower unobserved risk leads to weaker information asymmetry and higher profitability of digital channels. We highlight three mechanisms of the risk screening effect: heterogeneous marginal influence of channel features on insurance demand, the channel features directly related to risk control, and the link between the digital divide and risk. We also find that the risk screening effect mainly comes from the extensive margin, i.e., from new consumers. This paper contributes to three connected areas in the insurance context: the heterogeneous economic impacts of digital technology adoption, insurer-side risk selection, and insurance marketing. <iframe src="https://publications.waset.org/abstracts/164066.pdf" style="width:100%; height:400px;" frameborder="0"></iframe> <p class="card-text"><strong>Keywords:</strong> <a href="https://publications.waset.org/abstracts/search?q=digital%20economy" title="digital economy">digital economy</a>, <a href="https://publications.waset.org/abstracts/search?q=information%20asymmetry" title=" information asymmetry"> information asymmetry</a>, <a href="https://publications.waset.org/abstracts/search?q=insurance" title=" insurance"> insurance</a>, <a href="https://publications.waset.org/abstracts/search?q=mobile%20application" title=" mobile application"> mobile application</a>, <a href="https://publications.waset.org/abstracts/search?q=risk%20screening" title=" risk screening"> risk screening</a> </p> 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