Insurance Demand and Cargo Theft in the Brazilian Road Transportation System

The frequent occurrence of cargo theft in Brazil has considerably affected the highway transport mode. The utilization of these insurance have some relation with characteristics of transport companies (carriers), as well with the kind of service they sell. The main goal of this paper is to identify the main issues that influence the demand for these insurance by carriers, with emphasis on the theft insurance. To obtain the information, it was used a sample of 200 carriers companies. With the data, discrete choice models where estimated, founding on the difference between the Utility of buying or not the insurance. The geographic localization of companies is a variable that influences the demand for insurance, mainly the theft insurance. The fleet size operated by the companies, adopted as an indication of companies wealth, also presented a significant influence on the demand for insurance. That information allows to verify the type of good that insurance represent. The insurance of transporters responsibility (RCTR-C)can be considered as a superior good (as the wealth of companies increase when its demand also increases). However, the robbery insurance (RCF-DC) seemed to be an inferior good, with a smaller significance level and a smaller coefficient. The number of thefts suffered by the companies presented strong influence on the demand for the theft insurance, being the companies that have experience with a high number of thefts the ones with a larger demand for the insurance