PhD student in Actuarial Science
Indradeb began his PhD programme in 2017 and is supervised by Dr Pradip Tapadar and Dr Guy Rogers.
Insurance loss coverage and social welfare
Conference or workshop item
Chatterjee, I. et al. (2018). When is utilitarian welfare higher under insurance risk pooling? in: Mathematical and Statistical Methods for Actuarial Sciences and Finance (MAF 2018). Springer, pp. 219-223. Available at: https://doi.org/10.1007/978-3-319-89824-7_40.This paper focuses on the effects of bans on insurance risk classification on utilitarian social welfare. We consider two regimes: full risk classification, where insurers charge the actuarially fair premium for each risk, and pooling, where risk
classification is banned and for institutional or regulatory reasons, insurers do not attempt to separate risk classes, but charge a common premium for all risks. For the case of iso-elastic insurance demand, we derive sufficient conditions on higher and lower risks’ demand elasticities which ensure that utilitarian social welfare is higher under pooling than under full risk classification. Empirical evidence suggests that these conditions may be realistic for some insurance markets.