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The strategic role of reinsurance in the United Kingdom's (UK) non-life insurance market
OAI: oai:purehost.bath.ac.uk:openaire_cris_publications/1987a66b-851a-4cb8-818d-b76d88063156 • DOI: https://doi.org/10.1016/j.jbankfin.2015.09.010
Abstract
Using panel data for five main lines of insurance in the United Kingdom’s (UK) non-life insurance market we demonstrate that by increasing the level of reinsurance, primary insurers increase their product-market share at the expense of less reinsured rivals. We also observe that the influence of reinsurance and other financial variables on insurers’ growth in product-market share differs across lines of insurance business. We conclude that reinsurance performs an important strategic function in insurance markets through its impact on product-market outcomes in competitive insurance markets. Additionally, we find that leverage is the most important factor affecting product-market share at the aggregate business level of the insurance firm.