The Distribution of Property/Liability Insurance in Canada: Costs and Market Structure
Date
2006
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Western Risk and Insurance Association
Abstract
Studies in the U.S. show that insurers that operate as exclusive writers have lower expense ratios than agency writers. In addition, exclusive and commodity writers dominate personal lines of insurance and agency writers dominate commercial lines. In contrast, Canadian agency writers dominate both personal and commercial lines. Furthermore, in Canada, a firm's distribution method does not affect its relative expenses. We conjecture that the higher fixed costs faced by exclusive and commodity writers in Canada counterbalance the lower variable costs faced by these firms. The lack of dominance in personal lines by Canadian exclusive writers is a rational response to the smaller market size in Canada and the higher level of government intervention.
Description
Article deposited after permission was granted by the Western Risk and Insurance Association, August 1, 2011.
Keywords
Citation
Anne Kleffner & Mary Kelly. “The Distribution of Property/Liability Insurance in Canada: Costs and Market Structure.” The Journal of Insurance Issues Vol. 29, No. 1: 2006