Organisational Structure and Internal Control in the UK Insurance Industry

A significant body of literature supports the superiority of the multidivisional organisational structure for the management of a diversified enterprise. However recent research has cast doubt on the widespread existence of optimally organised multidivisional firms and has suggested that, in practice, what is observed is a hybrid type of administrative structure. This paper focuses on the extent and nature of divisionalisation within UK insurance companies. Such companies are of particular interest for two reasons. First, changes in organisational structure have been recent and, second, the companies tend to operate in related areas of business. The results herein support the notion that a hybrid structure is more prevalent since the evidence presented suggests that where divisionalisation exists it is sub-optimal.