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The risk screening effect of digital insurance distribution

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Abstract
Extant research holds that digital sales channels advance competition and service or goods availability but rarely details the attendant information asymmetry. Leveraging a large unique dataset, this study examines a specific case in which consumers have a choice between offline and digital channels for insurance purchases. We find that digital channels screen in consumers with lower unobserved risk. For term life, endowment and disease insurance products, the average risks of the policies purchased through digital channels were significantly lower than those purchased offline after controlling for all observed risk characteristics. This risk screening effect mainly comes from the inclusion of new low‐risk enrollees. As a consequence, digital channels exhibit lower information asymmetry and greater profitability compared to offline channels.
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Description
Publisher
Wiley
Citation
American Risk and Insurance pp. 1-26
Collections
Accounting & Finance
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Murphy_2024_The_Risk.pdf
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Keywords
digital economy, information asymmetry, insurance distribution, mobile application, risk screening, Accounting, auditing and accountability
ULRR Identifiers
https://doi.org/10.34961/researchrepository-ul.27678465
 https://researchrepository.ul.ie/handle/10344/14060
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Funding Information
Major Grant of National Social Science Foundation of China, Grant/Award Number: 23&ZD177; Research Project of Shanghai Institute of International Finance and Economics
Sustainable Development Goals
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Article
Rights
https://creativecommons.org/licenses/by-nc-sa/4.0/
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