Details
We are honoured to host Marco Cosconati, Head of Research and Statistics Unit, for an online presentation of his latest research paper via MS Teams on 21 April 2026.
Abstract
This paper studies dynamic pricing in insurance markets, focusing on the role of customer tenure as a lever for price discrimination. Using a market-wide matched insurer–insuree panel covering Italian auto insurance contracts from 2013 to 2021, I recover the equilibrium relationships linking tenure, premiums, switching behavior, and profitability.
Identification exploits a regulator-imposed divestiture that forced a large transfer of contracts between two insurers, generating a sharp and exogenous reset of customer tenure while preserving risk characteristics, coverage, and pricing terms. This setting allows me to isolate the causal effect of tenure on pricing within an equilibrium framework.
The results show that insurers engage in systematic “price walking.” Premiums increase by approximately 7.2% per year of tenure along the equilibrium price–tenure schedule—more than three times the estimate obtained from standard fixed-effects models. Prices are substantially lower for new customers, reflecting steep introductory discounts that gradually dissipate as relationships mature.
Switching probabilities increase with tenure, indicating that consumers respond actively to back-loaded pricing rather than remaining passively locked in. As a consequence, expected markups rise early in the customer relationship and then flatten as retention declines.
A sufficient-statistic welfare analysis suggests that while the per-contract deadweight loss is modest (around €1.4 per year), the aggregate cost exceeds €39 million annually in Italy’s mandatory auto insurance market.