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Competition in the insurance industry in Ecuador: An econometric analysis in life and non-life markets

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  • Camino-Mogro, Segundo
  • Armijos-Bravo, Grace
  • Cornejo-Marcos, Gino

Abstract

This study empirically analyzes the degree of competition in the insurance industry segmented in life and non-life market in Ecuador from 2001 to 2016, we use the Panzar and Rosse methodology to assess the competitive conditions, we apply POLS, year fixed effects, firm fixed effects and random effects, then we determine if the market is in long run equilibrium to validate the conclusions obtained. We analyze two different markets to provide evidence of the competitive environment in which firms operates, we have added certain control variables such as firm size, whether the insurer is public, whether it receives foreign investment and if it is related to the banking financial system. The results indicate that insurance industry in Ecuador operates in a perfect competition environment, we find that life and non-life markets are in long run equilibrium; other result shows that being related to banks in the Ecuadorian financial system improves the revenue generation; being a public insurer and receiving foreign investments do not have a relationship with revenue.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:quaeco:v:71:y:2019:i:c:p:291-302
    DOI: 10.1016/j.qref.2018.10.001
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    More about this item

    Keywords

    Market concentration; Competition; Banks;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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