Quantitative Economics

Journal Of The Econometric Society

Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331

Quantitative Economics: Jul, 2020, Volume 11, Issue 3

Asymmetric information in secondary insurance markets: Evidence from the life settlements market

Daniel Bauer, Jochen Russ, Nan Zhu

We use data from a large US life expectancy provider to test for asymmetric information in the secondary life insurance—or life settlements—market. We compare realized lifetimes for a subsample of settled policies relative to all (settled and nonsettled) policies, and find a positive settlement‐survival correlation indicating the existence of informational asymmetry between policyholders and investors. Estimates of the “excess hazard” associated with settling show the effect is temporary and wears off over approximately 8 years. This indicates individuals in our sample possess private information with regards to their near‐term survival prospects and make use of it, which has economic consequences for this market and beyond.

Asymmetric information life settlements life expectancy secondary insurance market D12 G22 J10

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Supplemental Material

Supplement to "Asymmetric information in secondary insurance markets: Evidence from the life settlements market"

Supplement to "Asymmetric information in secondary insurance markets: Evidence from the life settlements market"

Supplement to "Asymmetric information in secondary insurance markets: Evidence from the life settlements market"

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