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Mutuality as a control for information asymmetry: a historical analysis of the claims experience of mutual and stock fire insur ance companies in Sweden, 1889 to 1939
Umeå University, Faculty of Social Sciences, Department of Economic History.
Umeå University, Faculty of Social Sciences, Department of Economic History.ORCID iD: 0000-0002-3293-2318
2011 (English)In: Business History, ISSN 0007-6791, E-ISSN 1743-7938, Vol. 53, no 7, 1074-1091 p.Article in journal (Refereed) Published
Abstract [en]

We test two competing arguments regarding the influence of organisational form onunderwritingperformance usingdatafromtheSwedish fireinsuranceindustry for the years 1889 to 1939 – a period of both economic growth and stagnation. Since mutuality is a response to information asymmetry problems, mutual insurers are expected to report lower annual claims relative to premiums than stock insurance companies. However, an alternative view is that stock insurers seek to reduce information asymmetry problems by issuing non-participatory rights insurance contracts with high deductibles that induce risk-sharing between the insurer’s shareholders and policyholders. This implies that stock insurers are likely to report lower annual claims than mutual insurers. Our results show that organisational form is an important determinant of the claims experience of Swedish fire insurers, suggesting that mutuality acts as an effective control for information asymmetries in the market.

Place, publisher, year, edition, pages
Ilford, Essex: Cass , 2011. Vol. 53, no 7, 1074-1091 p.
Keyword [en]
fire insurance
National Category
Economic History
Research subject
Economic History
Identifiers
URN: urn:nbn:se:umu:diva-49682DOI: 10.1080/00076791.2011.582577OAI: oai:DiVA.org:umu-49682DiVA: diva2:456521
Projects
Vetenskapsrådet; Financial modernisation and economic growth: Is the financial revolution compatible with neoclassic growth
Funder
Swedish Research Council, 2008-2752-58469-11
Available from: 2011-11-15 Created: 2011-11-15 Last updated: 2017-12-08Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf