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The Market Structure–Performance Relationship in the International Insurance Sector

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  • Nat Pope
  • Yu‐Luen Ma

Abstract

This article tests the applicability of the structure–conduct–performance (SCP) hypothesis in the international nonlife insurance marketplace. We employ a panel data regression methodology that includes 23 nations (developed and developing countries) over the time period of 1996 to 2003. The results reveal that the interaction of market liberalization and market concentration shares a complex relationship with market profitability. Our results show that the expectations associated with the SCP hypothesis are supported when the levels of liberalization are low. However, for markets that are highly liberalized the presence of foreign insurers significantly alters the dynamics of nonlife insurance markets.

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  • Nat Pope & Yu‐Luen Ma, 2008. "The Market Structure–Performance Relationship in the International Insurance Sector," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(4), pages 947-966, December.
    • Handle: RePEc:bla:jrinsu:v:75:y:2008:i:4:p:947-966
    DOI: 10.1111/j.1539-6975.2008.00292.x
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    3. Boris Marović & Vladimir Njegomir & Dragan Marković, 2013. "Competition In Insurance Markets Of The Region Of Former Yugoslavia," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 5-6, pages 354-363, August.
    4. Jeungbo Shim, 2017. "An Investigation Of Market Concentration And Financial Stability In Property–Liability Insurance Industry," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(2), pages 567-597, June.
    5. David Cummins, J. & Rubio-Misas, María, 2021. "Country factor behavior for integration improvement of European life insurance markets," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 186-202.
    6. Vladimir Njegomir & Dragan Stojic & Dragan Markovic, 2011. "Liberalisation, Market Concentration And Performance In The Non-Life Insurance Industry Of Ex-Yugoslavia," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 20(1), pages 21-40, june.
    7. Vladimir Njegomir & Boris Marovic & Radenko Puric, 2014. "Development And Competitiveness Aspects Of Insurance Markets Of Former Yugoslavia: The Emphasis On Montenegrin Insurance Market," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 23(1), pages 291-308, june.
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    9. Chen, Pei-Fen & Lin, Chun-Wei & Lee, Chien-Chiang, 2019. "Financial crises, globalization, and insurer performance: Some international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 835-856.
    10. Laurie J. Bates & James I. Hilliard & Rexford E. Santerre, 2012. "Do Health Insurers Possess Market Power?," Southern Economic Journal, John Wiley & Sons, vol. 78(4), pages 1289-1304, April.
    11. Cummins, J. David & Rubio-Misas, María & Vencappa, Dev, 2017. "Competition, efficiency and soundness in European life insurance markets," Journal of Financial Stability, Elsevier, vol. 28(C), pages 66-78.
    12. Parente, Ronaldo & Choi, Byeongyong Paul & Slangen, Arjen H.L. & Ketkar, Sonia, 2010. "Distribution system choice in a service industry: An analysis of international insurance firms operating in the United States," Journal of International Management, Elsevier, vol. 16(3), pages 275-287, September.
    13. Lee, Chien-Chiang & Lin, Chun-Wei, 2016. "Globalization, political institutions, financial liberalization, and performance of the insurance industry," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 244-266.
    14. Vladimir Njegomir & Boris Marović & Rado Maksimović, 2010. "The Economic Crisis And The Insurance Industry: The Evidence From The Ex-Yugoslavia Region," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 55(185), pages 129-162, April - J.
    15. Chang, Vincent Y.L., 2023. "Do InsurTech startups disrupt the insurance industry?," Finance Research Letters, Elsevier, vol. 57(C).
    16. Subrato Banerjee & Basri Savitha, 2021. "Competition reduces profitability: the case of the Indian life microinsurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(3), pages 383-398, July.
    17. Camino-Mogro, Segundo & Armijos-Bravo, Grace & Cornejo-Marcos, Gino, 2019. "Competition in the insurance industry in Ecuador: An econometric analysis in life and non-life markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 291-302.
    18. Dina Aurora Elena, 2018. "Globalization on the Romanian insurance market in terms of competition," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 12(1), pages 311-323, May.
    19. Tulus Suryanto & Darul Dimasqy & Reza Ronaldo & Mahjus Ekananda & Teuku Heru Dinata & Indra Tumbelaka, 2020. "The Influence of Liberalization on Innovation, Performance, and Competition Level of Insurance Industry in Indonesia," Sustainability, MDPI, vol. 12(24), pages 1-25, December.
    20. Bojan Srbinoski & Klime Poposki & Gorazd Čibej, 2021. "An empirical investigation of determinants of life insurers’ performance: Evidence from selected countries in Central, Eastern, and Southeastern Europe (CESEE)," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 24(3), pages 293-310, September.

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