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- Title
CONCENTRATION IN THE U.S. LIFE INSURANCE INDUSTRY.
- Authors
Cummins, J. David; Denenberg, Herbert S.; Scheel, William C.
- Abstract
Growing concentration within an industry can have serious economic implications for the viability of the industry in meeting the needs of its customers. A refined analysis using narrowly defined market segments discloses the absurdity of life insurance concentration measurements that are performed on a highly aggregated, national basis. The stranglehold of economic power wielded by a few companies does not appear necessarily to work to the benefit of the consumer. The efficiency of companies in writing more ordinary insurance per dollar of surplus was not found to be significantly related to the size of the firm. Furthermore, the results suggest that concentration and competition are inversely related. The states where concentration was highest tended to have a lower percentage increase in ordinary insurances in force as well as a higher premium rate per dollar of insurance. These results should pose as clear warnings to complacent regulation and seriously question whether the consumer is benefited by the current high degree of concentration within the life insurance business.
- Subjects
UNITED States; INDUSTRIAL concentration; INSURANCE companies; LIFE insurance; EMPLOYEE benefits; ECONOMIC impact
- Publication
Journal of Risk & Insurance, 1972, Vol 39, Issue 2, p177
- ISSN
0022-4367
- Publication type
Article
- DOI
10.2307/251879