The University of Piraeus submitted a scientific article for review by the internationally renowned scientific journal "Journal of Business Economics (JBE)", entitled "Road accidents and motor insurance premiums in major European economies" received positive comments and is currently under review for publication.
We analyze the linkage between road accidents and motor insurance premiums in European countries. The contribution of the present paper is threefold. Firstly, it combines traffic accidents, an important externality arising from road congestion, With motor insurance premiums. Secondly, it focuses on carefully assembled data set comprising of public data on premium and road accident data for various European countries. Thirdly, departing from linear models previously employed, the nonlinear nonparametric generalized additive modelling approach, which is flexible enough to reveal the functional form between motor insurance premiums and determinant factors. We find that the functional form between road accidents and is an upwards sloping line, highlighting the fact that the larger the traffic accidents the higher the premiums. This finding is robust to various combinations among the number of accidents and the number of either injured or killed persons in accidents. This finding provides empirical support for our hypothesized relationship between motor insurance premiums and road accidents. We also find that claims expenditure and per capital income exercise an increasing effect on premiums. Public policies aiming at mitigating traffic congestion should have an effect in terms of controlling motor insurance premiums.
