The determinants of actuarial costs in the New Zealand life insurance industry

Mike Adams

Applied Financial Economics, 1997, vol. 7, issue 1, 1-7

Abstract: The financial economics literature suggests that the extent to which surrogate monitors such as actuaries are employed by owners of the firm depends upon organizationspecific factors such as size and ownership structure. Using 1991-1993 data drawn from New Zealand's life insurance industry, an empirical examination is conducted to see whether the demand for actuarial services is distinguished by the characteristics of life insurance firms. The empirical results indicate that, consistent with expectations, expenditure on actuarial services was positively associated with large and multiproduct firms and those with high underwriting risk. However, organizational form and the substitutive effects of auditing on actuarial costs, were found not to be statistically significant.

Date: 1997
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DOI: 10.1080/096031097333790

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