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Collusion between Retailers and Customers: The Case of Insurance Fraud in Taiwan

Author

Listed:
  • Pierre Picard

    (CREST - Centre de Recherche en Economie et en Statistique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique)

  • Jennifer Wang
  • Kili Wang

    (TKU - Tamkang University [New Taipei])

Abstract

The outsourcing of retail services is frequently at the origin of agency costs, associated with the discretion in the way retailers do their job. This is particularly the case when retailers and customers collude to exploit loopholes in the contracts between producers and customers. In this paper, we analyze how insurance distribution channels may a¤ect such misbehaviors, when car repairers join policyholders to defraud insurers. We focus attention on the Taiwan automobile insurance market by using a database provided by two large Taiwanese automobile insurers. The theoretical underpinning of our analysis is provided by a model of claims fraud with collusion and audit. Our econometric analysis confirms that fraud occurs through the postponing of claims to the end of the policy year, possibly by filing a single claim for several events. It highlights the role of car dealer agencies in the collusive fraud mechanism..

Suggested Citation

  • Pierre Picard & Jennifer Wang & Kili Wang, 2019. "Collusion between Retailers and Customers: The Case of Insurance Fraud in Taiwan," Working Papers hal-02045335, HAL.
    • Handle: RePEc:hal:wpaper:hal-02045335
    Note: View the original document on HAL open archive server: https://hal.science/hal-02045335
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    References listed on IDEAS

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