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IR11-008_Ayuso-Bermudez.pdf (677.55 KB)

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Working paper

Publication date

2011

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cc-by-nc-nd, (c) Ayuso et al., 2011
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/58511

Influence of the claimant’s behavioural features on motor compensation outcomes

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Abstract

The decision to settle a motor insurance claim by either negotiation or trial is analysed. This decision may depend on how risk and confrontation adverse or pessimistic the claimant is. The extent to which these behavioural features of the claimant might influence the final compensation amount are examined. An empirical analysis, fitting a switching regression model to a Spanish database, is conducted in order to analyze whether the choice of the conflict resolution procedure is endogenous to the compensation outcomes. The results show that compensations awarded by courts are always higher, although 95% of cases are settled by negotiation. We show that this is because claimants are adverse to risk and confrontation, and are pessimistic about their chances at trial. By contrast, insurers are risk - confrontation neutral and more objective in relation to the expected trial compensation. During the negotiation insurers accept to pay the subjective compensation values of claimants, since these values are lower than their estimates of compensations at trial.

Subject

Assegurances d'accidents, Companyies d'assegurances, Correlació (Estadística), Indemnització, Gestió de conflictes

Subject (English)

Accident insurance, Insurance companies, Correlation (Statistics), Indemnity, Conflict management

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Documents de treball (Institut de Recerca en Economia Aplicada Regional i Pública (IREA))

Citation

AYUSO, Mercedes, BERMÚDEZ, Lluís and SANTOLINO, Miguel. Influence of the claimant’s behavioural features on motor compensation outcomes. IREA – Working Papers. 2011. Vol.  IR11/08. ISSN 2014-1254. [consulted: 14 of August of 2026]. Available at: https://hdl.handle.net/2445/58511

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