Document Type : Original Research Paper
Author
Department of Economics, Imam Sadiq University (AS), Tehran, Iran
Abstract
In order to expand the demand for insurance in all disciplines, it is necessary to know the conditions and status of information distribution and the issues arising from it; For example, regarding life insurance, the need to understand adverse selection is unavoidable in order to avoid low pricing and increase the risk of insurer bankruptcy. In this research, we have investigated this phenomenon by using the data of life insurance policyholders of an insurance company. According to the theory of Ratchchild-Stiglitz about the separating equilibrium, high-risk insurers seek full coverage with a fair premium, and low-risk insurers seek an insurance contract with incomplete coverage and a lower (and fair) premium. Based on this, by using Evioz software and the amount of reduction in full life insurance coverage (decrease in death capital), influencing variables on the risk level of policyholders (death risk) were intuitively identified. Finally, by calculating the risk index using significant variables (variables increasing the level of risk with a positive sign and variables decreasing the level of risk with a negative sign) and examining the significance of the relationship between the annual premium as an indicator of the demand for life insurance and the estimated risk index, the hypothesis of the existence of adverse selection It was approved in life insurance.
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