Attitudes toward fraudulent behavior and the decision to file first‐party and third‐party bodily injury auto insurance claims

Abstract

This research explores the presence of ex post moral hazard in auto insurance claim filing decisions by determining the relationship between attitudes toward fraudulent behavior and the decisions by those injured in auto accidents to file bodily injury auto insurance claims. Of particular interest is the effect of these attitudes on the propensity to file first‐party bodily injury auto insurance claims, which has not been specifically identified in earlier studies. A multinomial logistic regression model is used to take advantage of survey data that directly capture the first‐ and third‐party auto insurance claim filing decisions for bodily injuries suffered in auto accidents across the United States between 1995 and 1998. The results indicate that, in addition to third‐party claims, ex post moral hazard is present in first‐party bodily injury auto insurance claim filing decisions as well despite possible differences in the incentives to commit first‐party and third‐party insurance fraud.