Heterogeneous selection in the market for private supplemental dental insurance: evidence from Germany

  • Jan Michael Bauer
  • Jörg Schiller
  • Christopher SchreckenbergerEmail author


This paper analyzes the German market for supplemental dental insurance to identify selection behavior based on individuals’ private information. The rather limited underwriting by German private health insurers makes this market especially prone to selection effects. Although the standard positive correlation test does not indicate asymmetric information in this market, we conjecture that this outcome may result from sample heterogeneity when adverse and advantageous selection occur simultaneously and offset each other. Examining a large set of potential sources of selection effects, we find mainly that the holding of other supplemental health insurance policies, which is related to risk preferences, contributes to an advantageous selection in this insurance market. Our results suggest that even in the absence of a positive correlation between risk and insurance coverage, the German market for supplemental dental insurance suffers from information asymmetry, which is caused by multidimensional private information.


Asymmetric information Advantageous selection Adverse selection Dental insurance Supplemental health insurance 

JEL Classification

D82 G22 I13 



We gratefully acknowledge financial support from the Deutscher Verein für Versicherungswissenschaft e.V.

Compliance with ethical standards

Conflict of interest

Jörg Schiller received research grants from the Deutscher Verein für Versicherungswissenschaft e. V. This research grant was partially used for financing Christopher Schreckenberger. Jan Michael Bauer declares that he has no conflict of interest.

Ethical approval

This article does not contain any studies with human participants or animals performed by any of the authors.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.MSCCopenhagen Business SchoolFrederiksbergDenmark
  2. 2.Chair for Insurance Economics and Social SecurityUniversity of HohenheimStuttgartGermany

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