A comparative analysis of the efficient structure hypothesis within the insurance industry: Focusing on the top eight performers of both life and non-life for the years 2005-2009

• Main Authors: Francisco, Christine Gail L., Laurente, Zaldeleen R., Malacca, Alyssa Camille P., Tongco, Georgina A.
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Insurance companies > Philippines; Insurance companies > Philippines > Management; Insurance companies > Investment > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18355
• Institution: De La Salle University

The concept of efficiency enables a business to capture majority of the market in order to acquire higher profits by maximizing the available resources to produce the most output and at the same time by lowering its costs. With this, the proponents of the research paper aimed to establish if the Philippines insurance industry, specifically the top eight (8) performers from both life and non-life sctors, followed the efficient structure hypothesis theory in carrying out its operations during the years 2005-2009, patterning the research to the journal of Byeongyong and Weiss entitled, An empirical Investigation of Market Structure, Efficiency, and Performance in Property-Liability Insurance . Necessary adaptations were made to suit the present condition of the Philippine insurance industry, such as altering the variables and its components. Profit and price were used as dependent variables, while actual cost, actual revenue, agent's services, labor services, materials, equity capital, output and market concentartion were used as independent variables. Control variables include company growth, reinsurance, and advertising intensity. To determine the results of the study, a panel regression was used. Results show that the significant variables to both sectors for the dependent variable profit of the insurance industry are actual revenue, actual cost, agent's services and market concentration. The results for the dependent variable price, on the other hand shows no common less significant variables than profit. Having said this, it can be implied that the insurance industry in the Philippines is more focused and aggressive in making profit rather than having a definite pricing strategy.