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
2011 (English)In: Business History, ISSN 0007-6791, E-ISSN 1743-7938, Vol. 53, no 7, 1074-1091 p.Article in journal (Refereed) Published
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.
Research subject Economic History
IdentifiersURN: urn:nbn:se:umu:diva-49682DOI: 10.1080/00076791.2011.582577OAI: oai:DiVA.org:umu-49682DiVA: diva2:456521
ProjectsVetenskapsrådet; Financial modernisation and economic growth: Is the financial revolution compatible with neoclassic growth
FunderSwedish Research Council, 2008-2752-58469-11