Innovation, which is defined as the "beating heart of the economy of the twenty-first century", is one of the key elements of economic policy and competitiveness. Together with entrepreneurship creates a set of factors conducive to the economic development. Innovations are also challenging for...

We demonstrate how innovations in insurance risk classification can lead to adverse selection, or cream skimming, against insurers that are slow to adopt such pricing innovations. Using a model in which insurers with insufficient pricing data cannot differentiate between low‐ and high‐risk...