Structure, Conduct and Performance Analysis of the South African Auto Insurance Market: 1980‐2000

Abstract

The traditional structure-conduct-performance framework makes the explicit prediction that market structure determines market conduct, performance and power. The primary goal of this study is to evaluate this prediction using the South African (SA) short-term auto insurance market. The empirical evidence shows that a link between market structure and market conduct, performance and/or power is not present. "Prices" and profits are not statistically significantly related to various sellers' concentration measure and do not follow any explicit trend over time. By construction, profits are directly related to "prices" and follow a cyclical trend, as observed in other countries. A secondary goal of this paper is to compare the findings for the US auto insurance market with the empirical evidence on the SA auto insurance market. While there are few similarities, there is an underwriting cycle in the SA auto insurance market such as is observed for the US auto insurance market. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 Economic Society of South Africa.

Market structure, efficiency and profitability of insurance companies in Ghana

“…This implies that efficient non-life insurance firms produce at a lower prices to drive up sales and market share, hence higher profitability. This results is consistent with the findings of Liebenberg and Kamerschen (2008) who found mixed results 5 for the SCP hypothesis in the South African Auto insurance market.…”

“…In this study, we employ the DEA technique of Charnes et al (1974) and Banker et al (1984) to estimate both technical and pure technical efficiency scores for both non-life and life insurers while using the structural measures of market structure in the form of the Herfindahl index and 4-firm concentration ratio. Unlike Liebenberg and Kamerschen (2008), we bring robust evidence to our findings by considering other known correlates of profitability in leverage, size, underwriting risk, GDP growth and inflation. Additionally, this study employs two different estimations in the panel corrected standard errors of Beck and Katz (1995) and the random effects estimation to provide robust evidence on the relationship between profitability and market structure and efficiency of both life and non-life insurance market in Ghana.…”

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

“…The second is that of Shepherd and Shepherd (2003) , who used the collective share of the four largest firms (CR4) in the industry, offering some alternative measures of oligopoly classifications. Liebenberg and Kamerschen (2008) and Setiawan and Lansink (2018) highlighted that HHI and the concentration ratio are complementary of each other; therefore, this study retains both measures to portray competition and market structure in the industry. and are defined as follows: where depicts the output of -th firm in -th industry in the year.…”

Industrial concentration and price-cost margin of the Indonesian food and beverages sector

“…In spite of this, Besanko (2004) gave a classification of market structure based on HHI. Furthermore, Liebenberg and Kamerschen (2008) also discusses the importance of using both HHI and concentration ratio. 4 BPS defines medium-sized firms as those firms employing more than 20 workers.…”