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Auto Insurers and the Air Bag

Robert Kneuper and Bruce Yandle
The Journal of Risk and Insurance
Vol. 61, No. 1 (Mar., 1994), pp. 107-116
DOI: 10.2307/253427
Stable URL: http://www.jstor.org/stable/253427
Page Count: 10
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Auto Insurers and the Air Bag
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Abstract

The intense lobbying effort by auto insurers in support of air bags as opposed to mandatory seat belts has been characterized as a struggle to save human life. But seat belts and air bags both reduce injuries and fatalities. Unlike seat belts, however, air bags transform the nature of losses from an auto accident, resulting in property claims rather than bodily injury claims. Passive air bags also are more effective in guarding against injuries associated with costly and unpredictable court awards. These features make air bags attractive for transforming difficult-to-predict uncertainty into risk, which can be forecasted with accuracy. The result: Insurance is a more effective risk management instrument.

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