CEDAR seminar: Adverse selection in mutual benefit societies

Adverse selection in mutual benefit societies – an longitudinal approach.

Mutual benefit societies evolved as the major providers for illness, accident and burial insurance in the late 19th and early 20th century in the Western world. One of the major problems facing the insurers was the risk for adverse selection; that unhealthy individuals had more incentive then healthy to insure when priced for the average risk. By empirically examine if the longevity among insured in mutual benefit societies was different from uninsured, we seek to identify the presence of adverse section. We find no compelling evidence that unhealthy individuals was more likely to insure, or reasons to believe that adverse selection was behind the decline of mutual benefit societies in the twentieth century.

Lars Fredrik Andersson, Umeå Universitet
Liselotte Eriksson, Umeå Universitet
Josef Liljegren, Umeå Universitet