Asymmetric information in late 19th century cooperative insurance societies

Between 1880 and 1930, cooperative insurance was the main source of illness, accident, and death insurance in the United States, Canada, and England. This paper tests for asymmetric information in cooperative insurance societies and examines how their pricing policies affected the profile of members. We find strong evidence that, unlike their modern substitutes, cooperative societies were able to overcome the asymmetry of information. Furthermore, as a consequence of non-actuarial pricing, our results suggest that workers deferred their membership until they were about 40 years old.