Does Surplus Participation Reflect Market Discipline? An Analysis of the German Life Insurance Market

Martin Eling and Dieter Kiesenbauer ()

Journal of Financial Services Research, 2012, vol. 42, issue 3, 159-185

Abstract: The aim of this paper is to analyze whether the level of surplus participation affects customer demand. We use multivariate linear regression models and data on surplus participation, new business, and lapse for the German life insurance market from 1998 to 2008. We find a significant positive dependence between surplus participation and new business growth as well as a significant negative dependence between surplus participation and growth of lapse volume. Overall, these findings indicate that customers do react to changes in product characteristics, which might be seen as indicative of market discipline. Our results are important for insurance company managers, regulators, and boards of insurance associations. Copyright Springer Science+Business Media, LLC 2012

Keywords: Regulation; Market discipline; Life insurance; Surplus participation; New business growth; Lapse; G22; G28; G38 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10693-011-0113-z

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