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Profit and Concentration in Commercial Automobile Insurance Losses

Author

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  • Vickie L. Bajtelsmit
  • Raja Bouzouita

Abstract

Pricing of commercial insurance has generally been thought to be more competitive than that of personal insurance. For this reason, there has been little academic interest in the impact of market structure on insurer profitability for these lines, despite findings of such a relationship in other lines. This study examines whether such a relationship exists for commercial automobile insurance and finds that states with higher levels of concentration have higher average profit margins. This is consistent with the results of Bajtelsmit and Bouzouita (1998) on market structure and performance in personal auto lines. Other variables that are important determinants of profitability include the direct writers’ share of the market, state-wide productivity growth, and lagged interest.

Suggested Citation

  • Vickie L. Bajtelsmit & Raja Bouzouita, 1998. "Profit and Concentration in Commercial Automobile Insurance Losses," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 21(2), pages 172-182.
    • Handle: RePEc:wri:journl:v:21:y:1998:i:2:p:172-182
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    Cited by:

    1. Tanveer Ahmad Khan & Indrani Chakraborty, 2022. "Dynamic Interactions Between Structure and Performance in the Textile and Clothing Industry in India: An Econometric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 173-209, March.
    2. Jeungbo Shim, 2023. "Are mergers and acquisitions beneficial to consumers? Evidence from the property‐liability insurance industry," The Financial Review, Eastern Finance Association, vol. 58(3), pages 629-652, August.

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