TY - JOUR
T1 - Competition reduces profitability
T2 - the case of the Indian life microinsurance industry
AU - Banerjee, Subrato
AU - Savitha, Basri
N1 - Funding Information:
Funding Open access funding provided by Manipal Academy of Higher Education, Manipal.
Publisher Copyright:
© 2021, The Author(s).
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
PY - 2021/7
Y1 - 2021/7
N2 - We aim to understand the effect of market and firm-level concentration on return on equity in the Indian life microinsurance industry (LMI). This research is one of the first attempts to empirically test structure–performance issues in India. Using data on 14 companies that remained active in the LMI market during 2009–2019, we demonstrate that firms in the Indian LMI market scored better on profitability measures whenever competitive pressures were lower. We calculate Herfindahl–Hirschman concentration indexes (HHI), market share and entropy measures and use panel data techniques to find a positive effect of concentration and a negative effect of market share. We conclude that LMI-specialised insurers in India perform better than diversified insurers.
AB - We aim to understand the effect of market and firm-level concentration on return on equity in the Indian life microinsurance industry (LMI). This research is one of the first attempts to empirically test structure–performance issues in India. Using data on 14 companies that remained active in the LMI market during 2009–2019, we demonstrate that firms in the Indian LMI market scored better on profitability measures whenever competitive pressures were lower. We calculate Herfindahl–Hirschman concentration indexes (HHI), market share and entropy measures and use panel data techniques to find a positive effect of concentration and a negative effect of market share. We conclude that LMI-specialised insurers in India perform better than diversified insurers.
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U2 - 10.1057/s41288-020-00203-5
DO - 10.1057/s41288-020-00203-5
M3 - Article
AN - SCOPUS:85100117698
SN - 1018-5895
VL - 46
SP - 383
EP - 398
JO - Geneva Papers on Risk and Insurance: Issues and Practice
JF - Geneva Papers on Risk and Insurance: Issues and Practice
IS - 3
ER -