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Competition, efficiency and soundness in European life insurance markets

Cummins, J. David; Rubio-Misas, María; Vencappa, Dev

Authors

J. David Cummins

María Rubio-Misas

Dev Vencappa dev.vencappa@nottingham.ac.uk



Abstract

This paper provides cross-country evidence on the association between soundness and competition in the life insurance industry, where competition is measured by the Boone indicator. We analyze 10 European Union (EU) life insurance markets over the post-deregulation period 1999-2011. The results indicate that competition increases the soundness of the EU life insurance markets. Since the Boone indicator measures competition based on the reallocation of profits from inefficient insurers to efficient ones, our results suggest that efficiency is the mechanism through which competition contributes to insurer solvency. The soundness-enhancing effect of competition is greater for weak insurers than for healthy ones.

Citation

Cummins, J. D., Rubio-Misas, M., & Vencappa, D. (2017). Competition, efficiency and soundness in European life insurance markets. Journal of Financial Stability, 28, https://doi.org/10.1016/j.jfs.2016.11.007

Journal Article Type Article
Acceptance Date Nov 22, 2016
Online Publication Date Nov 25, 2016
Publication Date Feb 28, 2017
Deposit Date Mar 16, 2017
Publicly Available Date Mar 16, 2017
Journal Journal of Financial Stability
Print ISSN 1572-3089
Electronic ISSN 1572-3089
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 28
DOI https://doi.org/10.1016/j.jfs.2016.11.007
Keywords Competition, Soundness, Boone indicator, European life insurers, Financial crisis
Public URL http://eprints.nottingham.ac.uk/id/eprint/41334
Publisher URL http://www.sciencedirect.com/science/article/pii/S1572308916301760
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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