The Dutch Insurance Industry : Under Competition and Efficiency Analysis

Improving competition is an ultimate goal of any government policy. Since competition is considered as a guarantee for a stable market, a fair game and welfare creation. However, measuring competition directly in the service industry is still a problematic issue due to either the lack of prices' data or the huge variety of the available products in the insurance market. In this context, this empirical research paper will investigate the degree of competition in the Dutch life and non-life insurance markets using indirect measures. For this purpose, a panel data from internal database of the De Netherlands Bank (DNB) will be used so as to calculate competition measures such as Boone indicator of competition and scale economies over the time period between 1995 and 2009. As a consequence, our research has revealed that the non-life insurance market enjoys a moderate degree of completion whereas the life insurance market operates under low degree of competition. Therefore, some regulatory measures are needed in order to improve competition and so stability in the life insurance market