Efficiency, competition and the development of life insurance in France (1870-1939) Or: should we trust pension funds ?
AbstractFrench life insurance remained underdeveloped in comparison with other countries during a long period between 1870 and 1939. We show that technical peculiarities of the contracts used and their interaction with macroeconomic fluctuations explain the wide fluctuations we observe in insurance operations. In an industry where the accumulation both of long-lived contracts and reputation is central, it is likely that these fluctuations may have slowed the enlargement of the client population and the increase in managed assets�; nevertheless, we suggest they are not sufficient to explain their long term stagnation. Low returns paid to clients, resulting from very conservative investment strategies, were the main reason for that stagnation, since only those interested by the life-cycle related aspects of insurance contracts continued to put money in these institutions, with most savers investing directly in the market or through State-owned financial institutions. The main reason for such an investment (and then low-growth) strategy is the existence of a set of conservative regulations and a stable oligopoly in the industry from the 1880s onwards. We suggest that established insurance companies were able to impose regulations and barriers to entry blocking the access of competitors to their market, so maintaining a hold on a small but very profitable market.
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Bibliographic InfoPaper provided by DELTA (Ecole normale supérieure) in its series DELTA Working Papers with number 2003-17.
Date of creation: 2003
Date of revision:
Other versions of this item:
- Hautcoeur, Pierre-Cyrille, 2004. "Efficiency, competition, and the development of life insurance in France (1870-1939): Or: should we trust pension funds?," Explorations in Economic History, Elsevier, vol. 41(3), pages 205-232, July.
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- Hautcoeur, P. C. & Sicsic, P., 1998.
"Threat of a capital levy, expected devaluation and interest rates in France during the interwar period,"
DELTA Working Papers
98-01, DELTA (Ecole normale supérieure).
- Hautcoeur, Pierre-Cyrille & Sicsic, Pierre, 1999. "Threat of a capital levy, expected devaluation and interest rates in France during the interwar period," European Review of Economic History, Cambridge University Press, vol. 3(01), pages 25-56, April.
- Hautcoeur, P-C. & Sicsic, P., 1998. "Threat of a Capital Levy, Expected Devaluation and Interest Rates in France during the Interwar Period," Working papers 50, Banque de France.
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