Optimal insurance deductibles maximize compensation for large losses, impacting coverage levels.
The study looked at how insurance deductibles affect compensation for different types of losses. They found that having a deductible can focus insurance efforts on large losses, but may reduce payouts for smaller losses. The researchers identified an optimal deductible level for large risks. For lower risks, it's important to have insurance coverage even if the deductible is less than optimal. This applies to different types of losses covered by various insurance policies.