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Claims Adjudication in the Personal Automobile Insurance Residual Market
Mark J. Browne and Brenda P. Wells
The Journal of Risk and Insurance
Vol. 66, No. 2 (Jun., 1999), pp. 275-290
Published by: American Risk and Insurance Association
Stable URL: http://www.jstor.org/stable/253613
Page Count: 16
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Government high-risk insurance plans vary in terms of structure and operation. In automobile insurance, most states have an assigned risk plan (ARP), while a few have a joint underwriting association (JUA). ARPs and JUAs are similar in their purpose: to provide state-mandated automobile insurance coverages to high-risk drivers. They are, however, fundamentally different in their structure and operation. This article analyzes the differences in claims payment practices between these two forms of automobile residual market facility used in the United States. This study predicts that, due to differences in incentives, JUAs result in higher claims payments on the part of insurers. The empirical results are consistent with the prediction.
The Journal of Risk and Insurance © 1999 American Risk and Insurance Association