Competition reduces profitability: the case of the Indian life microinsurance industry

Subrato Banerjee, Basri Savitha

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish
JournalGeneva Papers on Risk and Insurance: Issues and Practice
DOIs
Publication statusAccepted/In press - 2021

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Finance
  • Economics and Econometrics

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