Personal Bias in Automobile Claims Settlement

Abstract

Despite the importance of claims handling practices to consumers and insurers, relatively little research has been done in this area. Our purpose here is to consider one aspect of automobile bodily injury liability claims management: the assignment of fault across parties as judged by the insured defendant's claims adjuster. Because legal fault assessment directly affects whether a defendant is held liable, and if so, for how much, this aspect of claims management is significant. We use accident data from the 1997 Insurance Research Council Closed Claim Survey to test for relationships between fault assessment and gender, age, and state comparative negligence rules. Controlling for actual fault, we find a greater assessment of fault against female, young, and elderly drivers. The results of the study are of interest to insurers seeking to provide better customer service, to consumer advocacy groups interested in claims settlement practices, and to insurance regulators. Copyright 2003 The Journal of Risk and Insurance.

Risk Aversion, Negotiation, and Claims Settlement Strategies

“…We expect a positive relationship between metropolitan population and payment if Danzon's urbanization theory holds. Doerpinghaus, Schmit, and Yeh (2003) and are consistent with lower fault assessment by claims adjustors for male insured drivers than for female insured drivers, controlling for other factors. We do not find an age effect in fault assignment.…”

Age and Gender Effects on Auto Liability Insurance Payouts

“…More attention has been given to the role of discrimination in these areas. Here we summarize Doerpinghaus, Schmit, and Yeh's 2003 review of the relevant literature, augment what they provide, and add a section on the role of discrimination.…”

“…Doerpinghaus, Schmit, and Yeh (2003) test for gender and age effects on fault determination in automobile liability claims. They find that female, elderly, and youthful drivers are assessed higher levels of fault, even after controlling for other relevant factors such as driving violations, type and severity of injury, and legal jurisdiction.…”

A Cross‐National Study of Government Social Insurance as an Alternative to Tort Liability Compensation

“…Demand, and therefore the size of the insurance market, however, is also affected by risk attitudes. Theoretically and empirically, existing literature demonstrates that gender, education, and income levels can be used as proxies for risk attitudes (Halek and Eisenhauer, 2001;Doerpinghaus, Schmit, and Yeh, 2003;Dohmen et al, 2005). To account for these variations, we incorporate 5 Further, some literature has delineated legal systems in more refined ways, differentiating across those founded on principles first established in France, Germany, and Scandinavia.…”