Competition, efficiency and soundness in European life insurance markets

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

*Corresponding author for this work

Research output: Contribution to journalArticle

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 analyse 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.

Original languageEnglish
Pages (from-to)66-78
Number of pages13
JournalJournal of Financial Stability
Volume28
Early online date25 Nov 2016
DOIs
Publication statusPublished - 1 Feb 2017

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Insurer
Life insurance
Insurance market
European Union
Solvency
Deregulation
Reallocation
Profit
Industry competition
Insurance industry

Cite this

Cummins, J. D., Rubio-Misas, M., & Vencappa, D. (2017). Competition, efficiency and soundness in European life insurance markets. Journal of Financial Stability, 28, 66-78. https://doi.org/10.1016/j.jfs.2016.11.007
Cummins, J. David ; Rubio-Misas, María ; Vencappa, Dev. / Competition, efficiency and soundness in European life insurance markets. In: Journal of Financial Stability. 2017 ; Vol. 28. pp. 66-78.
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Cummins, JD, Rubio-Misas, M & Vencappa, D 2017, 'Competition, efficiency and soundness in European life insurance markets', Journal of Financial Stability, vol. 28, pp. 66-78. https://doi.org/10.1016/j.jfs.2016.11.007

Competition, efficiency and soundness in European life insurance markets. / Cummins, J. David; Rubio-Misas, María; Vencappa, Dev.

In: Journal of Financial Stability, Vol. 28, 01.02.2017, p. 66-78.

Research output: Contribution to journalArticle

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Cummins JD, Rubio-Misas M, Vencappa D. Competition, efficiency and soundness in European life insurance markets. Journal of Financial Stability. 2017 Feb 1;28:66-78. https://doi.org/10.1016/j.jfs.2016.11.007