The theory of risk classification

Keith John Crocker, Arthur Snow

Research output: Chapter in Book/Report/Conference proceedingChapter

12 Citations (Scopus)

Abstract

Risk Classification is the avenue through which insurance companies compete in order to reduce the cost of providing insurance contracts. While the underwriting incentives leading insurers to categorize customers according to risk status are straightforward, the social value of such activities is less clear. This chapter reviews the theoretical and empirical literature on risk classification, which demonstrates that the efficiency of permitting categorical discrimination in insurance contracting depends on the informational structure of the environment, and on whether insurance applicants become informed by the classification signal.

Original languageEnglish (US)
Title of host publicationHandbook of Insurance
Subtitle of host publicationSecond Edition
PublisherSpringer New York
Pages281-313
Number of pages33
ISBN (Electronic)9781461401551
ISBN (Print)9781461401544
DOIs
StatePublished - Jan 1 2013

Fingerprint

Risk classification
Insurance
Discrimination
Social values
Contracting
Insurer
Costs
Incentives
Insurance contract
Underwriting
Insurance companies

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

Cite this

Crocker, K. J., & Snow, A. (2013). The theory of risk classification. In Handbook of Insurance: Second Edition (pp. 281-313). Springer New York. https://doi.org/10.1007/978-1-4614-0155-1_11
Crocker, Keith John ; Snow, Arthur. / The theory of risk classification. Handbook of Insurance: Second Edition. Springer New York, 2013. pp. 281-313
@inbook{282b634cb1a544c797365b3c13ed338e,
title = "The theory of risk classification",
abstract = "Risk Classification is the avenue through which insurance companies compete in order to reduce the cost of providing insurance contracts. While the underwriting incentives leading insurers to categorize customers according to risk status are straightforward, the social value of such activities is less clear. This chapter reviews the theoretical and empirical literature on risk classification, which demonstrates that the efficiency of permitting categorical discrimination in insurance contracting depends on the informational structure of the environment, and on whether insurance applicants become informed by the classification signal.",
author = "Crocker, {Keith John} and Arthur Snow",
year = "2013",
month = "1",
day = "1",
doi = "10.1007/978-1-4614-0155-1_11",
language = "English (US)",
isbn = "9781461401544",
pages = "281--313",
booktitle = "Handbook of Insurance",
publisher = "Springer New York",
address = "United States",

}

Crocker, KJ & Snow, A 2013, The theory of risk classification. in Handbook of Insurance: Second Edition. Springer New York, pp. 281-313. https://doi.org/10.1007/978-1-4614-0155-1_11

The theory of risk classification. / Crocker, Keith John; Snow, Arthur.

Handbook of Insurance: Second Edition. Springer New York, 2013. p. 281-313.

Research output: Chapter in Book/Report/Conference proceedingChapter

TY - CHAP

T1 - The theory of risk classification

AU - Crocker, Keith John

AU - Snow, Arthur

PY - 2013/1/1

Y1 - 2013/1/1

N2 - Risk Classification is the avenue through which insurance companies compete in order to reduce the cost of providing insurance contracts. While the underwriting incentives leading insurers to categorize customers according to risk status are straightforward, the social value of such activities is less clear. This chapter reviews the theoretical and empirical literature on risk classification, which demonstrates that the efficiency of permitting categorical discrimination in insurance contracting depends on the informational structure of the environment, and on whether insurance applicants become informed by the classification signal.

AB - Risk Classification is the avenue through which insurance companies compete in order to reduce the cost of providing insurance contracts. While the underwriting incentives leading insurers to categorize customers according to risk status are straightforward, the social value of such activities is less clear. This chapter reviews the theoretical and empirical literature on risk classification, which demonstrates that the efficiency of permitting categorical discrimination in insurance contracting depends on the informational structure of the environment, and on whether insurance applicants become informed by the classification signal.

UR - http://www.scopus.com/inward/record.url?scp=84939171158&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84939171158&partnerID=8YFLogxK

U2 - 10.1007/978-1-4614-0155-1_11

DO - 10.1007/978-1-4614-0155-1_11

M3 - Chapter

SN - 9781461401544

SP - 281

EP - 313

BT - Handbook of Insurance

PB - Springer New York

ER -

Crocker KJ, Snow A. The theory of risk classification. In Handbook of Insurance: Second Edition. Springer New York. 2013. p. 281-313 https://doi.org/10.1007/978-1-4614-0155-1_11