Profit and Concentration in Commercial Automobile Insurance Losses
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.
Volume (Year): 21 (1998)
Issue (Month): 2 ()
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