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IJOEM
10,4
Market structure, efficiency and
profitability of insurance
companies in Ghana
648 Abdul Latif Alhassan
Received 28 October 2013
University of Ghana Business School, University of Ghana, Accra, Ghana
Revised 7 February 2014 George Kojo Addisson
27 March 2014
Accepted 5 June 2014 STARLIFE Insurance Company, Accra, Ghana, and
Michael Effah Asamoah
Department of Finance, Central University College, Accra, Ghana
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Abstract
Purpose The purpose of this paper is to examine the impact of the regulatory-driven market
structure on firm pricing behaviour by testing the structure-conduct-performance (S-C-P) hypothesis
for both life and non-life insurance markets in Ghana.
Design/methodology/approach Using a panel data on 14 life and 22 non-life insurers from 2007
to 2011, the authors employed the Herfindahl Hirschman Index and concentration ratio as proxies
for the S-C-P hypothesis while efficiency scores were estimated using the data envelopment analysis
technique to proxy for the efficient structure (ES) hypothesis. The dependent variable, profitability was
measured as return on assets while controlling for size, underwriting risk, leverage, GDP growth
rate and inflation. The models were estimated using the panel corrected standard errors of Beck and
Katz (1995) and random effects estimations.
Findings The results from the empirical estimation provide ample evidence in support for ES hypothesis
for both life and non-life insurance markets. While conflicting results was found for SCP hypothesis in the
non-life insurance market, it was rejected in the life insurance market. The findings also point to an
increasing level of competition in both life and non-life insurance industry in Ghana though they still remain
concentrated with the life insurance sector having high levels of efficiency compared to the non-life sector.
Practical implications The findings of the study will enhance the understanding of firm behaviour in
the new markets created to shape regulatory and competition policies of the regulator to promote consumer
welfare while ensuring a stable industry to enhance its role in economic development.
Originality/value This is the first study to test the market power and efficient hypotheses on the
insurance industry in Ghana. To the best of the authors knowledge, this study is the first to examine
the determinants of profitability in the non-life insurance market.
Keywords Profitability, Insurance, Efficiency, Ghana, Market structure
Paper type Research paper
1. Introduction
Following the separation of life insurance business from non-life insurance business in
Ghana with the passage of the Insurance Act 724 in 2006, most of the insurance firms
maintained their non-life businesses in the original companies to set up new companies
to manage the life businesses. The insurance market has since been opened to keen
competition among players and attracted new entrants bringing the total number of
industry players to 43 from 25 licensed firms in 2006. Five out of the 18 life insurance
International Journal of Emerging
Markets companies control about 75 per cent of gross premiums over the last six years up to the
Vol. 10 No. 4, 2015
pp. 648-669
period ending 2011. In the non-life insurance market, concentration is still among five
Emerald Group Publishing Limited out of the 25 firms. It is, however, interesting to note that the other 13 companies in the
1746-8809
DOI 10.1108/IJoEM-06-2014-0173 life insurance and 20 in the non-life insurance business that control at most 25 per cent
of the market have been gaining some points in their share of the market. The Insurance
industry has also been experiencing growth in premium mobilization above companies
the growth of the non-life insurance business since the Financial Sector Strategic
Plan II in 2012. These changes would have an impact on the structure of the industry
in Ghana
and reflect a growing insurance industry which has the benefit of accumulating
long-term funds for access by financial agents for investment purpose to propel
economic growth. 649
The pricing policy of insurance companies reflects assumed risks with high-risk
clients charged high premiums while low-risk clients are charged low premiums to reflect
the risk they bring into an insurance pool. However, the ability of the insurers to correctly
classify their clients depends on the factors that interplay in the marketplace with the
impact of market structure on firm pricing behaviour having received considerable
attention in empirical literature studies from an industrial organization perspective.
The traditional structure-conduct-performance (SCP) hypothesis of Bain (1951) and made
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popular by Baumol (1982) posits that a firms pricing and conduct are determined by the
structural features of the market within which it operates and that a highly concentrated
industry is characterized by collusion among the few large firms in setting prices to
achieve abnormal profits. This theoretical view of the market structure hypothesis was
subsequently challenged by the efficient structure (ES) hypothesis of Demsetz (1973) and
Peltzman (1977). According to the ES hypothesis, efficient producing firms generate
higher sales through lower pricing. This would result in higher market share for efficient
firms leading to concentration. An understanding of the interrelationships between
market structure, efficiency and profitability is therefore necessary to inform both
competition and regulatory policies.
respectively. Within five years of independence, the first national insurance company,
the State Insurance Company (SIC), came to existence in 1962 through a merger of
Gold Coast Insurance Company and Cooperative Insurance Society. As at the end of the
year 2013, the insurance industry was made up of 25 non-life companies, 18 life
companies, two Reinsurance companies, 54 Broking companies, one Loss Adjuster, one
Reinsurance Broker, one Oil and Gas companyand about 4000 insurance agents (www.
nicgh.org) regulated by the by the National Insurance Commission (NIC). The NIC came
to operation when the then Insurance Law 1989 (PNDC Law 227) was promulgated,
however, the industry is now regulated by the Insurance Act, 2006 (Act 724). The Act
724 mandates the NIC with the supervising, regulating and controlling the business of
insurance in Ghana. The minimum start-up capital of US$1 million for an insurance
company was reviewed to US$5 million or in its cedi equivalent by the Insurance Act,
2006 (Act 724). This was done to improve upon the financial capacity of insurance
companies to enable them underwrite more risky businesses especially with the
discovery of oil in commercial quantities (NIC, 2010).
Table I presents the gross premiums written for both the non-life and the life markets
from 2007 to 2011. It is observed that the industry has experienced consistent growth in
premiums throughout the period. The gross premiums written for the non-life and the life
businesses increased to GH358,352,702 and GH270,176,073 in 2011 from GH142,020,077
and GH67,534,641 in 2007, respectively. The yearly growth rates of the premiums in both
markets are presented in Figure 1. It is evident that the premium growth rate of the life
markets has been consistently greater than the non-life market. This shows that life
insurance businesses has made it the leading contributor to the industrys total premium
income than the motor business which was hitherto the driving force behind the insurance
business in Ghana (NIC, 2010, 2011). It is worth noting that life insurance in Ghana hitherto
0.00% Figure 1.
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Growth rate in
Source: NIC (2006-2011) premium income
was equivalent to insurance against death. However, this phenomenon has changed,
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especially when the life insurance was separated from general business. Life insurance
now includes endowment policies, funeral and others (www.nicgh.org).
25.0
Percentages 20.0
15.0
652
10.0
5.0
Figure 2.
Premium distribution 0.0
in life insurance 2007 2008 2009 2010 2011
(Top 5 firms) Source: NIC (2006-2011)
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is largely driven by premiums form motor business, followed by accidents, then fire,
marine and the others. For motor, annual gross premium recorded was GH123.9
million for 2010 from a previous years figure of GH105.6 million and landed at
GH162.4 representing 25.8 per cent of the entire premiums for the year 2011.
Premiums from accident business for 2011 was GH78.9 million denoting a market
share of 12.6 per cent. This increment was on the back of GH71.8 million for 2010.
The figure for 2010 was an increase of nearly GH23 million above the 2009 figure.
Fire insurance made an annual income of GH77.7 million and market share of
12.4 per cent for the period ending 2011. It is believed that the compulsory insurance
of all commercial buildings which was to start on 1 August 2011 will help boost
the income for this line of business (NIC, 2011; www.ghanabusinessnews.com).
Most of the market premiums are underwritten by SIC Limited, EIC Limited,
Metropolitan Insurance Company Limited (MET), Vanguard Assurance Company
Limited and Star Assurance Company limited; this accounted for 72.69 per cent of
gross premiums in 2007, 68.03 per cent in 2008, 66.25 per cent in 2009, 63.13 per cent
in 2010 and 59.98 per cent in 2011. The entrant of six new firms between 2006
and 2009 led to a decline in the market share of the top five insurers (NIC, 2011)
(Figure 3).
25.00
20.00 653
15.00
10.00
5.00 Figure 3.
0.00 Premium distribution
2007 2008 2009 2010 2011 in non-life insurance
(Top 5 firms)
Source: NIC (2006-2011)
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market structure, insurers set prices through cartel-like rating bureaus. The author
concludes that the collusive behaviour among insurers lead to the cuts in supply,
inefficient sales systems and over-capitalized industry.
Chidambaran et al. (1997) empirically analysed the economic performance across 18
different lines of the US property and liability insurance industry covering a ten-year
period from 1984 to 1993. The main was that profitability was driven by market
concentration to the SCP hypothesis. Bajtelsmit and Bouzouita (1998) also analysed the
SCP and ES hypotheses in the automobile market in USA from 1984 to 1992, the
authors found no evidence in support of the ES hypothesis. In extending the work of
Chidambaran et al. (1997) using a different data set on the US property and liability
insurance market, Choi and Weiss (2005) examined the market structure, efficiency and
performance over the period 1992-1998 using data at the company. By estimating both
revenue and cost efficiencies, they found evidence in support of the ES hypothesis to
indicate that cost-efficient firms charge lower prices and earn higher profits. Taking
motivation of regulatory differences in different state in the USA, Weiss and Choi
(2008) examined the SCP, relative market power (RMP) and ES hypotheses. They find
evidence to that market power is mostly exercised by insurers in non-stringently
regulated but competitive markets.
Meanwhile, Jedlicka and Adusei (2006) tested the SCP hypothesis on Austrian
insurance industry by considering a sample of 52 insurers between 2002 and 2003.
Although they find evidence to suggest the insurance market is concentrated, the SCP
hypothesis of collusive firms behvaiour was rejected. Pope and Ma (2008) examined
the SCP hypothesis on life insurance market from an international perspective by
employing a multiple regression analysis on a panel of 23 countries from 1996 to 2003
and found evidence in support of SCP hypothesis although they concluded that the
effect of market concentration on performance depended on the level of market
liberalization.
By employing data from 1980 to 2000, Liebenberg and Kamerschen (2008) examined
South-African auto insurance market and found no support for SCP hypothesis. In an
examination of the effect of liberalization on market structure and performance in the
non-life insurance industry in Eastern European countries, Njegomir and Stojic (2011)
employed a panel data from 2004 to 2008 to provide evidence in support of the SCP.
IJOEM With motivation from restructuring and consolidation of the European insurance
10,4 markets, Berry-Stlzle et al. (2011) studied the SCP, RMP and ES hypotheses in the
property and liability insurance industry in 12 European countries from 2003 to 2007.
They find strong support for the ES hypothesis while the SCP was rejected. The findings
of the above studies provided strong evidence in support of the ES hypothesis.
This could be explained in terms of anti-competitive legislation that promotes easy
654 entry and exits which serves as a check on the collusive behaviour in concentrated
markets in these developed countries as per Baumol (1982) contestable market theory.
However in less developed financial markets in emerging economies like Ghana, market
imperfections and high levels of concentrations makes collusive behaviour very likely.
To this end, we seek to provide empirical evidence on the SCP and ES hypotheses in
a developing insurance market in Africa.
In examining profitability determinants of life insurers in Ghana, Akotey et al. (2013)
employed a panel of ten life insurers over a ten-year period to identify gross premium
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written, insurers size, reinsurance, claims, management expenses and interest rate as the
significant determinants of life insurers profitability in Ghana. The authors however, did
not consider the effect of the structure of the life insurance industry on profitability. Based
on the mixed results for the SCP hypothesis in empirical studies reviewed, this study
seeks to bring new evidence on the SCP hypothesis from a developing insurance market
undergoing structural changes. In this study, we employ the data envelopment analysis
(DEA) technique of Charnes et al. (1978) and Banker et al. (1984) to estimate both technical
and pure technical efficiency (PTE) scores for both non-life and life insurers while using
the structural measures of market structure in the form of the Herfindahl index and four-
firm concentration ratio (CR4). Unlike Liebenberg and Kamerschen (2008), we bring robust
evidence to our findings by considering other known correlates of profitability in leverage,
size, underwriting risk, GDP growth and inflation. Additionally, this study employs two
different estimation techniques in the panel corrected standard errors (PCSE) of Beck and
Katz (1995) and the random effects (RE) estimation to provide robust evidence on the
relationship between profitability and market structure and efficiency of both life and
non-life insurance market in Ghana.
4. Methodology
This section describes the empirical strategy employed to examine the relationship
between market structure, efficiency and profitability of Ghanaian insurance
companies. We first describe our choice of market structure proxies and how they
are measured. The DEA technique is employed to measure insurance efficiency. This
study employed a panel data set which covers 14 life and 22 non-life insurance
companies in Ghana covering the period 2007 to 2011. This sample was taken from the
18 life and 24 non-life insurance firms in operation during the study period. The 14 life
insurers account for about 95 per cent of premium market share while the 22 non-life
insurers also account for about 93 per cent of premium market share. The data are
contained in annual financial report of the sample as obtained from the NIC, the
regulator of the insurance industry.
X
s
subject to: vi xi0
i1
X
s X
s
ur yrj vi xij p 0; j 1; 2; . . .; n (1)
r1 i1
ur ; vi X 0 r 1; 2; . . .; si 1; 2; . . .; m
where xij is the quantity of input i used by bank j, yrj is the quantity of output
r produced by bank j, and ur and vi refer to weights chosen for output r and input
i, respectively:
minh0 y
X
n
subject to: y0 xi0 lj xij X 0
j1
IJOEM X
m
ljr yrj X yro
10,4 j1
lj 40
The input-oriented model above seeks to minimize cost in achieving a desired level of
656 output. An efficient DMU has an efficiency score , of 1 and serves as the bench mark
for the DMUs within in an industry and employing the same technology. The modelled
linear programming assumes constant returns to scale as per Charnes et al. (1978)
which implies that each DMU operate at their optimal scale and that any increase in
inputs will result in proportional increase in outputs. The efficiency scores estimated
under the assumption of constant returns to scale is called technical efficiency (TE)
which denotes the ability of firms to employ technology to maximize out. However,
when inputs changes results in disproportional changes in the output variables, the
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DMUs are said to be operating at variable returns to scale, which Banker et al. (1984)
describes as PTE.
4.2.1 Input and output variables. Based on three principal services provided by
insurers in the form of real services, risk pooling and risk bearing and intermediation
functions, there is a general consensus on what constitute input variables in efficiency
studies. The input variables are classified into labour input and capital inputs. While
labour inputs are classified into business services input and labour cost, equity capital
and debt capital make up capital inputs. Our choices of input and outputs variables
employed were influenced by data availability. In line with Ansah-Adu et al. (2012),
the input variables considered were total operating expenditure and equity capital.
Total operating expenditure proxy for both labour and business services input.
Although the issue of insurance output remains contentions in literature, we follow the
arguments of Leverty et al. (2004) to employ net premiums instead of claims incurred as
our choice of output. Since outputs have to be desirable, no insurer seeks to maximize
incurred losses. We also employ net income after tax as the other output measure.
The efficiency scores are estimated under the out-orientation based on the notion that
insurers seek to maximize their earned premiums and profits to be able to adequately
provide cover for any incurred losses. The descriptive statistics of the input and
output variables are presented in Table II[4].
4.3.1 Control variables. We control for three firm-specific variables in size, leverage and
risk. Inflation and GDP growth are also controlled to account for the effect of the
macroeconomic environment of insurers profitability. These variables are selected based
on the studies of Akotey et al. (2013) in examining profitability determinants in the
Ghanaian life insurance industry. A brief description of the variables are given below.
Size. This variable is measured as the natural logarithm of total assets. The relationship
between size and profitability is ambiguous. A positive relationship indicates the
benefits of economies of scale advantages while a negative relationship is attributed
to diseconomies of scale.
Risk. Insurers risk is proxied by the ratio of incurred losses to earned premiums.
This measure captures the uncertainty that premiums earned may not be enough to
cover for losses incurred under the policies underwritten. We hypothesize that insurers
with high-underwriting risk would be less profitable, hence a negative relationship
with profitability is expected.
Leverage. Insurer generate leverage from unearned premiums from unexpired
policies and any outstanding claim amount. The quality of investments from the
leverage assumed determines its impact on profitability. Hence, the relationship
between leverage and insurance becomes positive through sound investment choices
that generate revenues above expected losses. Bad investments decisions leads to a
negative leverage-profitability relationship. While studies like Adams (1996), Adams
and Buckle (2003) and Akotey et al. (2013) have found evidence in support of a positive
relationship, Malik (2011) and Ahmed et al. (2011) find an inverse leverage-profitability
relationship.
GDP growth. The confidence of every business environment in reflected in the
growth in the real economy as captured by the gross domestic product. Increasing
growth stimulates demand for services such insurance cover by businesses to provide
cover their expanding businesses. The growth would also lead to increasing demand
by consumers for goods and services. In this line, we expect GDP growth to have a
positive relationship with profitability through growth in premium income.
Inflation. Increases in interest rate arising from high-inflationary pressures means
that returns on investments also increases. Hence, we expect inflation to have a positive
effect on insurers profitability due to high investment yields. However, a negative
relationship can be experienced when incurred losses exceeds any gains in investment
IJOEM returns. Additionally, the negative effect of inflation on real incomes means that
10,4 increasing inflation would result in reduced sale by insurance companies.
Equation (2) is thus expanded to form Equation (3) as described below:
ROAi;t ai b1 M P t b2 EH i;t b3 SI Z E i;t b4 LEV i;t b5 RI SK i;t
b6 GDP t b7 I N F t ui ei;t (3)
658
where ROAi,t is the return on assets for insurer i in year t. Return on assets is defined as
the ratio of profit after tax to total assets. ui denotes the firm specific-fixed effects (FE)
whiles ei,t represents the firm-specific unobservable effects which vary over time.
The measurements of the independent variables are presented Table III.
10 per cent but no significant differences was found for PTE. This indicates that life
insurance firms in Ghana have the ability to better maximize their outputs from the
production inputs compared to insurers in the non-life market.
Non-life Life
Years CR4 HHI CR4 HHI
Non-life Life
TE PTE TE PTE
TE PTE
Non-life
ROA 0.033 0.0847 0.199 0.177
HHI 0.124 0.027 0.098 0.172
CR4 0.578 0.054 0.510 0.670
PTE 0.782 0.248 0.173 1.000
TE 0.651 0.281 0.117 1.000
SIZE 15.977 1.085 13.951 18.822
LEV 0.765 0.214 0.216 0.982
RISK 0.181 0.279 0.163 2.261
GDP 8.256 3.454 3.990 14.390
INFL 13.188 4.015 8.730 19.250
Life insurance
ROA 0.06 0.16 0.43 0.47
HHI 0.14 0.01 0.10 0.16
CR4 0.67 0.04 0.51 0.71
PTE 0.87 0.15 0.51 1.00
TE 0.75 0.18 0.38 1.00
SIZE 16.28 1.16 13.30 18.71
LEV 0.67 0.22 0.23 0.77
RISK 0.36 0.18 0.02 0.77
Notes: ROA, return on assets; HHI, Herfindahl Hirschman Index; CR4, four firm concentration ratio;
Table VII. PTE, pure technical efficiency; TE, technical efficiency; SIZE, insurers size; RISK, underwriting risk;
Summary statistics LEV, leverage; GDP, economic growth rate; INFL, inflation rate
ROA HHI CR4 PTE TE SIZE LEV RISK GDP INFL Insurance
Non-life insurance
companies
ROA 1 in Ghana
HHI 0.002 1
CR4 0.07 0.85*** 1
PTE 0.28*** 0.22** 0.07 1
TE 0.40*** 0.39*** 0.24** 0.72*** 1 661
SIZE 0.08 0.23** 0.25** 0.01 0.001 1
LEV 0.54*** 0.22** 0.09 0.04 0.11 0.11 1
RISK 0.46*** 0.14 0.16 0.11 0.19* 0.28** 0.01 1
GDP 0.14 0.36*** 0.20*** 0.12 0.02 0.20* 0.08 0.14 1
INFL 0.245** 0.08 0.40*** 0.27** 0.30*** 0.15 0.16 0.04 0.393*** 1
Life insurance
ROA 1
HHI 0.09 1
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leaders in their pricing conduct could explain the conflicting evidence for the SCP; such
behaviour characterizes oligopolistic markets where market leaders compete against
each other. The proxies for ES (PTE and TE) exhibited significant positive relationships
with return on assets at 1 per cent to provide support for the ES hypothesis. This implies
that efficient non-life insurance firms produce at a lower prices to drive up sales and
market share, hence higher profitability. This results is consistent with the findings of
Liebenberg and Kamerschen (2008) who found mixed results[5] for the SCP hypothesis in
the South-African Auto insurance market.
With regard to the life model, the coefficients of market power (HHI and CR4) are
negative and statistically significant at between 5 and 1 per cent. This indicates that a
competitive life insurance industry leads to higher profitability implying a rejection of the
SCP hypothesis in the Ghanaian life insurance industry and denotes the absence of
collusive behaviour in the non-life market. This result is also consistent with the findings
of Choi and Weiss (2005), Jedlicka and Adusei (2006) and Berry-Stlzle et al. (2011).
Evidence was also found for the ES hypothesis as indicated by the positive significant
coefficient of TE and PTE at 1 per cent. This implies that profitability of life insurers in
Ghana thus results from efficient firms being able to lower per unit cost to sell more
products to capture larger market.
For the control variables, underwriting risk, leverage and inflation exhibited
significant relationships with profitability of non-life insurers in Ghana whereas size,
underwriting risk, leverage and inflation rate exhibited significant relationship with life
insurers profitability. For insurers size, larger life insurers exhibited significant positive Insurance
relationship with profitability which could imply the benefits of economies of scale companies
enjoyed by larger firms. This results is consistent with Akotey et al. (2013) on Ghanaian
life insurers. This relationship was significant at 1 per cent. However, larger non-life
in Ghana
insurers were found not able to leverage on their size to earn higher profitability as
indicated by insignificant relationship between size and profitability in the non-life model.
Underwriting risk which indicates the riskiness of the insurance business exhibited 663
significant negative relationship with return on assets in both non-life and life models at
significance of 1 and 5 per cent, respectively. As insurers underwrite high-risky policies,
the likelihood of high-claims payout reduces underwriting profits, hence reduced return on
the insurers assets all other things being equal. This effect of risk on profitability for the
non-life insurance market was greater than that of the life insurance market. This indicates
that selling more risky insurance business leads to high-claims payment, hence reduced
profitability. The non-life market would therefore benefit stringent regulatory policies that
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improve underwriting practices. These results are consistent with Akotey et al. (2013).
Leverage exhibited mixed relationships with profitability for non-life and
life models. For non-life models, leverage exhibited significant positive relationship
at 1 per cent implying that highly levered non-life insurers are profitable. For the life
model however, a significant negative relationship was exhibited between leverage and
profitability. On the macroeconomic variables, only inflation rate exhibited significant
relationship with profitability for both non-life and life insurers. The relationship between
inflation rate and insurers profitability was negative at a 1 per cent significance level
confirming the findings of Akotey et al. (2013) who reported similar relationship for the
life insurance industry in Ghana.
10,4
664
IJOEM
Table X.
error terms
heteroskedastic
Random effects
estimations with
and autocorrelated
Dependent variable: return on assets
Non-life insurance Life insurance
Model 1 Model 2 Model 3 Model 4 Model 1 Model 2 Model 3 Model 4
The results of this study have implications for the regulation of insurance
markets in Ghana and other developing countries. The rejection of the SCP hypothesis
coupled with the high levels of concentration in both markets indicates that
competition policies would not only lead to increased profitability but also improve
consumer welfare. Hence, we recommend that efforts aimed at promoting competitive
industry should be accelerated within a conducive framework to promote healthy
competition among industry players. Management of insurance companies should
also aim to develop manpower and invest in new technology to improve efficiency.
This could result in new product development and effective delivery systems to
maximize resource usage. Adherence to the best underwriting practices should be
pursued at both the regulatory level and firm level to reduce the risk inherent
in premium underwriting. This recommendation therefore re-enforces the decision
by the NIC in the adoption of the risk-based supervision framework and also in line
with the solution proffered by Akotey et al. (2013). Other significant determinants
of profitability identified could serve a benchmark for insurance companies in
improving profitability.
It is the recommendation of this study that future researchers could examine the
effect of competitive insurance market on efficiency of insurers. Other forms of
efficiency such as profit and revenue efficiency as well as different forms of insurance
profitability could also be examined in both markets. Data limitations made it
impossible for this current study. Productivity analysis of the Ghanaian insurance
market could also be an area of interest for further studies. From a methodological
perspective, a dynamic panel estimation can employed to deal with a potential of
endogeneity common with panel data models as well as examine the persistence of
insurers profitability in Ghana.
Acknowledgements
The authors are grateful to the Editor and Area Editor Professor Ronald Schramm for
their comments. Constructive comments from two anonymous reviewers which greatly
improved an earlier draft of the paper is appreciate. The authors also appreciated the
help of Cosmos Owusu of the National Insurance Commission in providing us with the
data. The paper was prepared while the first/corresponding author was a Teaching
Assistant at the Department of Finance, University of Ghana Business School. An
earlier draft of the paper was presented at the 1st University of Ghana Business School
Conference on Business and Development, April 8-9, 2013, Accra, Ghana.
IJOEM Notes
10,4 1. Chidambaran et al. (1997), Choi and Weiss (2005), Jedlicka and Adusei (2006), Berry-Stlzle
et al. (2011).
2. Jones et al. (1999), Liebenberg (2000), Theron (2001) and Liebenberg and Kamerschen (2008)
have all examined the South African Insurance market.
3. Ansah-Adu et al. (2012), Akotey et al. (2013) and Akotey and Abor (2013).
666
4. Firms with negative values were excluded from the efficiency analysis.
5. Generally, the SCP hypothesis was rejected for most indicators of market structure except ten
firm concentration ratio.
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About the authors
Abdul Latif Alhassan is currently pursuing his PhD in Business Administration (Finance) at the
Graduate School of Business, University of Cape Town, South Africa. His research interests are in
insurance economics, efficiency and productivity analysis, development finance, econometric
modelling and industrial organization theory. He has undertaken ad-hoc Refereeing for the
Journal of Risk Finance, International Journal of Emerging Markets and The Journal of
International Trade and Economic Development. Abdul Latif Alhassan is the corresponding
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