Abstract
The existence of asymmetric information in insurance markets has been studied extensively in the economics literature, whereas the factors likely to influence asymmetric information have had less attention. Using individual level insurance data from a Takaful health insurance company located in the United Arab Emirates (UAE), we consider how culture and religion influence asymmetric information. Our sample is unique because all the individuals in our sample reside in the UAE, but they originate from 141 different countries. We find evidence of a correlation between risk and claim performance among religious and non-religious individuals, suggesting the existence of asymmetric information in both groups. However, we find that the correlation for religious individuals is lower than that for the non-religious group. Our results are similar when we consider major Muslim holidays and the Monday effect. Finally, we provide some evidence that cultural background is also related to claim performance.
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