Mutuality as a control for information asymmetry
A historical analysis of the claims experience of mutual and stock fire insurance companies in Sweden, 1889 to 1939
Bibliographic Data
| ID | 8418919 |
|---|---|
| Authors | Mike Adams (0000-0002-1201-0025, University of Wales), Lars‐fredrik Andersson (0000-0002-1413-3707, Umeå University, corresponding author), Joy Yihui Jia (University of Wales), Magnus Lindmark (0000-0002-3293-2318, Umeå University) |
| Year | 2011 |
| Volume | 53 |
| Issue | 7 |
| Pages | 1074-1091 |
| Publication date | 2011-12-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Business History (JOURNAL) |
| Journal identifiers | ISSN: 0007-6791 • E-ISSN: 1743-7938 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/00076791.2011.582577 |
| OpenAlex | W2018877742 |
| Language | EN |
| Citations received | 7 |
| References cited | 37 |
We test two competing arguments regarding the influence of organisational form on underwriting performance using data from the Swedish fire insurance industry 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
Actuarial science · Business · Corporate governance · Economics · Information asymmetry · Insurance industry · Insurance policy · Shareholder · Stock (firearms · Underwriting · Finance · Insurance and Financial Risk Management · Insurance, Mortality, Demography, Risk Management · Law, Economics, and Judicial Systems
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| Unique citing works | 7 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2012 - 2020 (9) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 7 |