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Developing Insurance Markets : Does Fragmentation and a Reliance on Compulsion Hinder Innovation, Growth and Development (English)

Highly competitive markets or fragmented insurance markets are usually characterized by some irrational competition. In less developed non‐life insurance markets, this competition may be most visible in loss making compulsory motor insurance. Usually it is a large proportion of the business mix. Irrational price wars erode profits. A strict or penal treatment of claimants erodes trust. The societal and policy objectives of the compulsory lines of business are undermined and even can be forgotten altogether. This note examines the contention that the combination of markets that are too competitive and have an overreliance on compulsion also lack capacity to innovate. This is the first of a series of notes on market structure and development, largely from the same data set but separated for ease of access to readers with a particular interest in one or another situation.

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Citation

Thorburn,Craig W.

Developing Insurance Markets : Does Fragmentation and a Reliance on Compulsion Hinder Innovation, Growth and Development (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/810771577710977236/Developing-Insurance-Markets-Does-Fragmentation-and-a-Reliance-on-Compulsion-Hinder-Innovation-Growth-and-Development