Performance determinants of non-life insurance firms: a systematic review of the literature

Abstract

The performance of non-life insurers is essential to the economy because of their role in mitigating the risks firms and households face. This study provides a comprehensive overview of studies examining factors affecting non-life insurers’ performance. Based on 235 studies published between 1990 and 2021, the review demonstrates that firm-level factors such as size, organisational form, diversification, capital structure, risk, reinsurance, corporate governance, distribution system, and group affiliation, and external factors such as market structure, macroeconomic, financial, and institutional development are the major determinants of non-life insurers’ performance. Although the empirical evidence on the effect of these factors is generally mixed, firm size, capitalisation, risk, macroeconomic conditions, and, to some extent, corporate governance and market structure issues show a clear relationship with insurer performance. One of the implications of this study is that there may be a need for increased solvency surveillance, especially for smaller insurers, which appear to have a higher risk of insolvency than their larger counterparts.