Market Power of Non-Life Insurers in Poland
Purpose: The subject of the research in the article is market power of non-life insurers. The purpose of this study was to examine market power of non-life insurers in Poland and the factors affecting it. Design/Methodology/Approach: The empirical investigations are carried out in three stages. Using annual firm level data on 18 non-life insurance companies from 2011 to 2019, the author first estimated the parameters of the translogarithmic cost function using the between-group method to determine marginal costs. In the second stage, the Lerner index has been designated. The final stage involves the econometric modeling to identify determinants of market power of the insurers under study and theoretical justifications of model variables. The results of the study suggest the presence of high market power of insurers in the non-life insurance market. Findings: The results of the study suggest the presence of high market power of insurers in the non-life insurance market. The panel regression analysis identified two explanatory variables that significantly affect market power in this insurance sector, i.e., company size and technical cost efficiency Practical Implications: Regulatory authorities should be directed towards enhancing to identify the sources of market power and devise policies to address their effects in the non-life market. Originality/Value: This study presents the first application of non-structural measure of market power of non-life insurers in Poland.