Economics at your fingertips  

Concentration and financial stability in the property-liability insurance sector: global evidence

Muhammed Altuntas and Jannes Rauch

Journal of Risk Finance, 2017, vol. 18, issue 3, 284-302

Abstract: Purpose - We examine the effect of concentration in the insurance sector on insurer stability for a large set of developed and developing countries. In particular, we test whether concentration reduces financial fragility in the insurance sector (‘concentration-stability view’) or decreases stability in the insurance sector (‘concentration-fragility view’). Design/methodology/approach - We employ a dataset of 14,402 firm-year observations of property-liability insurers who appear in A.M. Best’s Statement File Global database during the period 2004–2012. We use regression analyses to examine the effect of concentration on the stability of insurance firms and apply different measures of concentration. Findings - Our results provide empirical support for the ‘concentration- fragility view’; that is, higher levels of concentration are associated with decreases in the insurance sector’s financial stability. Research limitations/implications - Our results have important policy implications, given that a primary purpose of insurance regulation is to protect policyholders against insurance firm defaults. Originality/value - No previous research analyses how recent trends in competition and consolidation, which have led to changes in insurance market concentration, affect the stability of insurance firms around the world. Our research is the first paper that provides evidence on the relation between concentration and stability in the insurance sector.

Keywords: Insurance; Stability; Risk management; Concentration (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... /journals.htm?id=jrf

Access Statistics for this article

Journal of Risk Finance is currently edited by Bonnie Buchanan

More articles in Journal of Risk Finance from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

Page updated 2019-11-24
Handle: RePEc:eme:jrfpps:jrf-10-2016-0128