TY - JOUR
T1 - What is the driving force behind consolidations in the insurance market?
AU - Okura, Mahito
AU - Yanase, Noriyoshi
N1 - Publisher Copyright:
© 2013, © Emerald Group Publishing Limited.
PY - 2013/2/22
Y1 - 2013/2/22
N2 - Purpose – The purpose of this paper is to discuss whether insurers could have a strong motivation for M&A in the future because they need to survive within the industry under oversaturated market conditions. Recently, Japanese non-life insurance markets, mainly the automobile insurance market, have reached the point of saturation due to the oversaturated domestic automobile market. At that time, the industry has also experienced successive large-scale M&A transactions. Design/methodology/approach – Using a theoretical model developed by Salent et al., the authors discuss whether an insurer's motivation for M&A could be affected by a saturation of the market. The authors also clarify whether insurance premium deregulation is a necessary condition for merger incentives. Findings – The authors conclude that, first, necessary requirement for insurers' motivation of consolidations is to loosen the rate regulation; and second, the sufficient condition is saturation of market. Research limitations/implications – This result is intuitive to understand recent circumstances surrounding the Japanese non-life insurance industry. Originality/value – This study is believed to be the first to discuss the relationship between a potential market size and M&A transactions.
AB - Purpose – The purpose of this paper is to discuss whether insurers could have a strong motivation for M&A in the future because they need to survive within the industry under oversaturated market conditions. Recently, Japanese non-life insurance markets, mainly the automobile insurance market, have reached the point of saturation due to the oversaturated domestic automobile market. At that time, the industry has also experienced successive large-scale M&A transactions. Design/methodology/approach – Using a theoretical model developed by Salent et al., the authors discuss whether an insurer's motivation for M&A could be affected by a saturation of the market. The authors also clarify whether insurance premium deregulation is a necessary condition for merger incentives. Findings – The authors conclude that, first, necessary requirement for insurers' motivation of consolidations is to loosen the rate regulation; and second, the sufficient condition is saturation of market. Research limitations/implications – This result is intuitive to understand recent circumstances surrounding the Japanese non-life insurance industry. Originality/value – This study is believed to be the first to discuss the relationship between a potential market size and M&A transactions.
KW - Acquisitions and mergers
KW - Consolidations
KW - Deregulation
KW - Insurance companies
KW - Insurance market
KW - Japan
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U2 - 10.1108/15265941311301152
DO - 10.1108/15265941311301152
M3 - Article
AN - SCOPUS:85015357102
VL - 14
SP - 108
EP - 119
JO - Journal of Risk Finance
JF - Journal of Risk Finance
SN - 0965-7967
IS - 2
ER -