The demand and supply of automobile insurance
Stith, Melvin Thomas
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Automobile; insurance; availability is a serious issue for motorists, regulators and the insurance industry. The costs imposed on the system by uninsured motorists are not trivial. In order to minimize these costs it is necessary to understand the factors that lead motorists to drive without insurance. This paper uses data reported to the California Department of Insurance as well as demographic data collected at the ZIP code level to analyze the demand for auto insurance in areas that the California Department of Insurance has designated as underserved. The results show that areas – as measured by ZIP codes – that are saddled with high poverty and areas that are predominately urban are more likely to have lower demand for automobile insurance. However, the fact that a certain area is predominately minority does not make it more likely to exhibit lower demand for automobile insurance.