The American Risk and Insurance Association will present the 2020 Robert I. Mehr Award to UConn Law Professor Peter Siegelman and Harvard Law Professor Alma Cohen for an article on adverse risk selection.
The award is given each year to recognize a paper published 10 years earlier in the Journal of Risk and insurance that has best stood the test of time. The article by Siegelman and Cohen, “Testing for Adverse Selection in Insurance Markets,” was published in 2010.
The article addresses adverse selection, which can arise when policyholders know more about their own risks than their insurer does. Insurers can't individually price risk, and must charge everyone a premium that reflects the average risk in the population. Those with the least risk will find the insurance is overpriced for their needs, and will tend to opt out of the market.
Economic theorists have known about this problem for decades, and it was taken for granted that it has a significant effect on insurance markets. Cohen and Siegelman found, however, that this may not always be the case.
After exploring the various techniques to detect adverse selection and reviewing the empirical literature, they concluded that sophisticated studies frequently failed to find adverse selection in the insurance market. Their paper, which has been cited more than 400 times by other scholars, proposes a research agenda to address guide further study of the matter.
Siegelman holds a Ph.D. in economics and a master’s degree in the study of law from Yale University. He joined the UConn Law faculty as a tenured professor in the fall of 2004, having previously visited at UConn and taught at Fordham Law School from 2000 to 2004.