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On the Cost Structure of the Japanese Property‐Casualty Insurance Industry
Author(s) -
Hirao Yukiko,
Inoue Tomoo
Publication year - 2004
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.0022-4367.2004.00100.x
Subject(s) - economies of scale , scope (computer science) , economies of scope , business , property insurance , scale (ratio) , insurance industry , finance , actuarial science , general insurance , insurance policy , marketing , physics , quantum mechanics , computer science , programming language
This article tests economies of scale and economies of scope for the property‐casualty insurance companies in Japan. We fit a composite cost function to a set of Japanese firms over the period from 1980 to 1995 and employ an error components model. Our main findings are as follows. First, statistically significant economies of scale are observed in both Japanese firms and foreign firms operating in Japan. Second, economies of scope are also statistically significant for Japanese firms and most of the foreign insurers between the “third sector” products and the rest of the property‐casualty insurance lines.