Efficiency, market structure and performance of the insurance industry in an emerging economy

Figures & data

Table 1. Summary statistics

	Mean	Std. Dev.	Min	Max
Premiums	684,626,311	471,010,709	142,572,607	1,567,574,557
Net Profit	83,998,651	22,132,179	60,651,447	108,122,466
Expenditure	540,027,889	313,049,622	202,480,064	717,308,995
Equity	21,426,504	23,470,928	123,559,788	3,192,549,072

Source: Author’s computation from NIC Data (2008–2019)

Table 2. Indicators of market structure in the general insurance industry in Ghana

Years	HHI	CR4
2008	0.172	0.670
2009	0.131	0.580
2010	0.113	0.590
2011	0.105	0.540
2012	0.099	0.510
2013	0.082	0.470
2014	0.075	0.434
2015	0.080	0.398
2016	0.074	0.362
2017	0.071	0.326
2018	0.069	0.290
2019	0.070	0.254

Source: Author’s computation from NIC Data (2008–2019)

Table 3. Indicators of market structure in the general insurance industry in Ghana

Years	Technical Efficiency	Pure Technical Efficiency
2008	0.290	0.570
2009	0.778	0.885
2010	0.773	0.857
2011	0.617	0.779
2012	0.692	0.759
2013	0.613	0.734
2014	0.573	0.708
2015	0.695	0.683
2016	0.671	0.766
2017	0.649	0.633
2018	0.637	0.607
2019	0.683	0.582

Source: Author’s computation from NIC Data (2008–2019)

Table 4. Test for mean differences in the efficiency scores

	TE	PTE
Means	0.639	0.714
Pearson Correlation	0.616
t-Stat	−2.519
t Critical one-tail [P(T ≤ t) one-tail]	1.795 [0.014**]
t Critical two-tail [P(T ≤ t) two-tail]	2.201 [0.028**]

** p < 0.05 (significant at the 5% alpha level).

Source: Author’s computation from NIC Data (2008–2019)

Table 5. Correlation matrix

	ROA	HHI	CR4	PTE	TE	SIZE	LEV	RISK	GDP	INFL
ROA	1.00
HHI	0.01	1.00
CR4	0.04	0.16**	1.00
PTE	0.15***	0.20**	0.16	1.00
TE	0.30***	−0.28***	−0.49**	−0.31***	1.00
SIZE	−0.07	0.16***	−0.14	0.40	0.62	1.00
LEV	0.13***	−0.17***	−0.33	0.08	0.28**	0.12*	1.00
RISK	−0.29***	−0.14	0.06	−0.33***	0.36	0.24	0.23	1.00
GDP	0.09	−0.21***	−0.33**	0.04	0.18	0.21*	0.20*	0.35*	1.00
INFL	−0.18**	−0.22	−0.33***	0.03	0.29**	0.16	0.13	0.16	0.39	1.00

* p < 0.1, ** p < 0.05, *** p < 0.01. (Significant at the 10%, 5% and 1% alpha levels, respectively).

Source: Author’s computation from NIC Data (2008–2019)

Table 6. OLS panel-corrected standard errors estimation

	Model 1	Model 2	Model 3	Model 4
Constant	−0.13	−0.17	−0.09	1.45
Herfindahl Hirschman Index	0.25	1.74**	1.62**	1.12**
4 Firm Concentration Ratio			−0.27	−3.70*
Pure Technical Efficiency	0.25**		0.21***
Technical Efficiency		0.30***		0.34***
Firm Size	0.27	0.22	0.12	0.32
Underwriting Risk	−0.52***	−0.26***	−0.17***	−0.36***
Leverage	0.34***	0.33***	0.37***	0.30***
Economic Growth Rate	0.01	−0.01	0.02	0.01
Inflation Rate	−0.07***	−0.03***	−0.08***	−0.02***
R^2	0.6931	0.6741	0.6833	0.6964
Adj. R^2	0.575	0.642	0.5752	0.6445
Wald χ^2 (7)	82.37	128.94	82	131.22
Prob > χ^2	0	0	0	0
Heteroskedasticity Test	5.28	7.45	5.36	7.39
Prob > χ^2	0.0215	0.0064	0.0206	0.0066
Autocorrelation Test AR (1)	0.0096	0.611	0.075	1.074
Prob > F	0.7618	0.4475	0.7886	0.3176
Insurers	29	29	29	29
Observations	348	348	348	348

* p < 0.1, ** p < 0.05, *** p < 0.01. (Significant at the 10%, 5% and 1% alpha levels, respectively).

Source: Author’s estimations of NIC Data (2008–2019) in STATA12