2014/03/21 by Sarit Weisburd · 1 citation
Economics, Econometrics and Finance · #Insurance and Financial Risk Management #Law, Economics, and Judicial Systems #Healthcare Policy and Management
paper · doi:10.1162/rest_a_00448
openalex publication_date 2014/03/21 · openalex created_date 2025/10/10 · openalex updated_date 2026/05/17
This paper capitalizes on a unique situation in Israel where car insurance coverage is often distributed as a benefit by employers. In our sample, employer-determined coverage resulted in an average 235 discount in accident costs. Using instrumental variable analysis on data provided by an insurance firm in Israel (2001–2008), we find that each 100 reduction in accident costs results in a 1.7 percentage point increase in the probability of an accident. At an average accident rate of 16.3 percent, this 10 percent increase in auto accidents can be interpreted as the effect of moral hazard on car accidents.