The structure of the global reinsurance market: An analysis of efficiency,scale, and scope |
| |
| Institution: | 1. Institute of Insurance Economics, School of Finance, University of St. Gallen, Switzerland;2. Department of Risk Management and Insurance, School of Economics, Peking University, China;1. Office of Financial Research, U.S. Treasury, 717 14th St NW, Washington, D.C., 20220, United States;2. International Monetary Fund, 700 19th St NW, Washington, D.C., 20431, United States;1. School of Economics and Business, University of Chile, Santiago, Chile;2. Center for International Development Harvard. Cambridge, MA, USA |
| |
| Abstract: | We estimate economies of scale and scope as well as cost and revenue efficiency to explain the structure of the global reinsurance market, where large reinsurers dominate but both diversified and specialized reinsurers are competitive. The costs and benefits of size and product diversification are particularly relevant to the reinsurance industry, as risk diversification is central to the industry's business model. We find that reinsurers with total assets less than USD 2.9 billion exhibit scale economies, while those with total assets greater than USD 15.5 billion do not. Large reinsurers are characterized by high cost efficiency, while small reinsurers exhibit superior efficiency only when specialized. Large reinsurers also exhibit revenue scope economies when operating both life and nonlife reinsurance. Moreover, the evidence is in line with the efficient structure hypothesis: cost-efficient reinsurers can charge lower prices without sacrificing profitability. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
