The Asymmetric Information Problem in Taiwan's Cancer Insurance Market

Abstract

This paper investigates the problem of asymmetric information in Taiwan's cancer insurance market. Through the survey data, we find evidence of adverse selection existing in this market. Furthermore, we collect additional information on the individual, and find that the individual's family cancer history contains additional valuable information. It can not only more accurately predict the probability of contracting cancer, as well as predict the willingness to purchase extended cancer insurance, but it can also help to mitigate the severity of adverse selection in the insurance market.

BETWEEN‐GROUP ADVERSE SELECTION: EVIDENCE FROM GROUP CRITICAL ILLNESS INSURANCE

“…Moreover, considering the very small expected benefit, the insured's incentive to change his/her lifestyle due to CI coverage is minimal. Wang et al (2011) find adverse selection in Taiwan's cancer insurance market, which is similar to our CI insurance product. They conclude that purchasing extended cancer insurance does not reduce insureds' efforts to prevent cancer.…”