Modelling different types of automobile insurance fraud behaviour in the Spanish market

From a microeconomic point of view, the control of insurance fraud requires a detailed knowledge of the insureds’ behaviour. In this paper, we present discrete-choice models for fraud behaviour and we estimate the influence of the insured and claim characteristics on the probability of committing fraud. Data correspond to a Spanish sample. Correction for choice-based sampling is introduced in the estimation due to the oversampling of fraud claims. The structure of the Spanish automobile insurance market is also discussed. Our results differ according to the type of fraud behaviour that is under consideration.