The significance of regulatory orientation, political stability and culture on consumption and price adequacy in insurance markets

摘要

Purpose - The purpose of this paper is to examine insurance regulation theories, regulatory agency structures and measures. Design/methodology/approach - This study investigates significance of regulatory agency structure, key regulatory measures, political stability and cultural dimension in insurance markets of 56 developed and developing countries for 2005-2009. Findings - It was found that insurance consumption is lower in countries with an authority exclusively for insurance regulation but life insurance consumption is higher when the agency is part of government or when another agency is jointly responsible for insurance regulation. Market entry regulation leads to lower consumption whereas market exit regulation has the opposite effect. Solvency regulation and required use of standard forms for insurer financials lead to greater consumption of insurance. A positive impact on the nonlife market is observed for accounting regulation and regulator's intervention power. Practical implications - Price control regulation may lower consumption of insurance whereas tariff rating brings about a rise in the consumption. Regulation of insurance intermediaries or corporate governance may lower insurance consumption whereas the requirement that insurers employ an actuary or actuaries gives rise to the consumption. Originality/value - The author found no difference between OECD and non-OECD countries. However, corruption-freeness and inflation impact insurance consumption. Using OECD country data only, a negative impact was found of the single agency structure and tariff regulation in the life insurance market and a positive impact of regulation by two or more agencies in the life insurance market and of price control regulation in the nonlife insurance market. Corruption-freeness positively affects the loss ratio in the life insurance market and the combined ratio in the nonlife insurance market.