Research

Cell Phone Laws and Rear-End Accidents

Abstract: In an attempt to reduce accident frequency caused by distraction involving cell phone use, the state of California enacted two sets of laws banning cell phone use while driving. We examine the relationship between laws to ban cell phone use while driving and rear-end accident frequency in California. Using a panel dataset that groups accidents by geographic location, we find evidence that the association between California’s handheld cell phone ban and the number of rear-end accidents is negative and statistically significant. These results have implications for public safety and transportation, automobile insurance markets and insurance regulation.

(To download a pdf version of the research click Cell Phone Laws).

Contingent Commissions and the Management of the Independent Agency

Abstract: Insurance agencies continue to exist as an important distribution mechanism because they give their contracting insurers advantages in risk selection and enable insurance applicants to transfer complex risks. While independent agencies are compensated by up-front commissions, a key component of their profitability is tied to contingent commissions. A contingency arrangement represents ex post compensation normally tied to underwriting profitability, volume and annual growth. We report two actual contingency contracts in the context of a decision process for choosing among contingency offerings by insurers. We incorporate both uncertainty and correlation among key variables to arrive at values for competing contracts, then use a downside risk approach that helps agency owners select the better contract. The approach offered in this paper is scalable to a selection problem for any number of contingency arrangements.

(To download a pdf version of the research click Contingent Commissions and the Management of the Independent Agency).

RECENT RMI RESEARCH SYNOPSES

In Cox, students are exposed to knowledge that is both conventional and accepted to be practical and principled, academic research that lies at the heart of risk and insurance economics. Research is usually nuanced because it often is a new extension of accepted knowledge. At times, research is based on a new idea that provides an answer to a current question.

Below are student research synopses of current, academic research written by scholars which have been published in one of the two journals of the American Risk and Insurance Association: the Journal of Risk and Insurance (JRI) and Risk Management and Insurance Review (RMIR), or other significant academic outlets. Students have been asked to both study the work, then tighten the author’s words into a more accessible and readable form for interested readers. Cox faculty have chosen the papers to be examined and we hope you enjoy the students’ summaries of these potentially important works.

RESEARCH IN THE FIELDS OF RISK MANAGEMENT AND INSURANCE

• Employee Benefits
  • Certain employees increase 401(k) plan participation when informed
  • Employer-sponsored health insurance, healthcare costs and obesity
• Managing the risks of an organization
  • Is there value in enterprise risk management (ERM)?
  • Is there value in traditional risk management activities?
  • Why corporations demand insurance?
  • Factors related to the implementation of enterprise risk management
  • Chief risk officers and the characteristics of firms that implement enterprise risk management
  • Key risk indicators and enterprise risk management
• Insurance regulation
  • What might the future hold for federal involvement in insurance regulation?
  • The relationship between auto insurance rate regulation and claims
  • Regulatory intervention into insurance markets: The Florida experience
  • The effectiveness of Canadian insurance regulation during the financial crisis
• Insurance operations
  • Why is insurance sold in so many ways? The costs and benefits of independent agencies
  • Contingent commissions and insurer performance
• Insurance markets
  • Systemic risk and the insurance industry
  • The Chinese insurance market
  • The market for directors' and officers' insurance
  • Why catastrophes can be uninsurable
• Insurance fraud
  • The Taiwanese experience after the typhoon