Mahito Okura

The relationship between moral hazard and insurance fraud

Purpose - The purpose of this paper is to investigate the insurance market in which moral hazard and insurance fraud coexist. In this situation, this research examines the relationship between moral hazard and insurance fraud. Also, this research shows how the amount of policyholders effort to lower accident probability changes when insurance firm increases their investment in preventing insurance fraud. Design/methodology/approach - Using a theoretical model containing five-stages, the author sheds light on how the possibility of insurance fraud affects the amount of policyholders effort. Findings - The main results of this research are as follows. First, the amount of policyholders effort is a weakly monotone decreasing function of the insurance firms investment in preventing insurance fraud. Second, unlike in previous moral hazard models, the policyholder chooses a strictly positive amount of effort even in the full insurance case because the possibility of insurance fraud gives an incentive to realize policyholders effort. Third, the amount of insurance firms investment in preventing insurance fraud depends on whether it wants to give an additional incentive to policyholders effort in exchange for realizing the possibility of insurance fraud. Originality/value - This is the first paper to investigate the relationship between moral hazard and insurance fraud by using the microeconomic theory.

Optimal Premium Subsidy and Its Impact on Individual Choice for Insurance Coverage

The purpose of this article is to analyze whether a government premium subsidy is desirable by using a game theoretic approach. From our analysis, the following main results are derived. When policyholder’s effort for lowering accident probability is not considered, government conducts premium subsidy when the fraction of policyholders is small. In contrast, when policyholder’s effort is considered, whether government conducts premium subsidy is ambiguous even if the fraction of policyholders is small.

The effect of competition on safety management to reduce risk in banking

The purpose of this research is to investigate safety management issues in relation to competition, using a game theoretical model. It seems that competition is a key factor in characterising the decision-making process as to whether safety management should be conducted. Therefore, in this research, the following two questions are considered. The first question is whether a relationship between competition and safety management exists because the reality of this link remains an open question. As a corollary, we investigate how the level of competition affects the conduct of safety management if such a relationship does exist. The second question involves identifying the types of conditions required to realise the outcome in which all firms conduct safety management.