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Performance of the Life Insurance Industry Under Pressure: Efficiency, Competition, and Consolidation
Author(s) -
Bikker Jacob A.
Publication year - 2016
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/rmir.12059
Subject(s) - consolidation (business) , economies of scale , competition (biology) , life insurance , economics , market share , monetary economics , business , market economy , finance , microeconomics , actuarial science , ecology , biology
This article investigates efficiency and competition in the Dutch life insurance market by estimating unused scale economies and measuring efficiency‐market share dynamics during 1995–2010. Large unused scale economies exist for small‐ and medium‐sized life insurers, indicating that further consolidation would reduce costs. Over time average scale economies decrease but substantial differences between small and large insurers remain. A direct measure of competition confirms that competitive pressure is lower than in other markets. We do not observe any impact of increased competition from banks, the so‐called investment policy crisis or the credit crisis, apart from lower returns in 2008.