the future. Will there be many new licenses to consider? Will the former monopoly company market share erode slowly or fall quickly?

This note takes a first step toward understanding the behavior of market share based measures by preparing a cross country data set and presenting some relatively preliminary and fundamental analysis of the data recognizing that such comparisons are not available in existing literature. Further analysis is proposed as part of the next steps. This paper has been prepared to act as a reference for other analysis and to prompt discussion on further developments.

The information on the data set can be used as part of the analysis of insurance markets by country authorities, policymakers, market participants and observers. Conclusions may contribute to risk analysis efforts, strategic planning, and to assist in prioritizing actions<sup>2</sup> .

# **_The Data Set_**

The data set covers several measures regarding concentration and competition from two data sources supplemented with additional calculations<sup>3</sup> . The data set was originally collated to examine and benchmark Herfindahl Index trends and levels separately for life and non life insurance as categorized in the source data. It has been supplemented by market shares of the largest company, top three companies, and top five companies so as to examine how change impacts on the larger players separately<sup>4</sup> . An estimate of numbers of companies was made from the tabulated data<sup>5</sup> . As a measure of market development, insurance penetration (written premium to GDP) is included; and as a measure of absolute market size, total premium in $US millions is included.

It has to be accepted that definitions of premium by class (life and non-life) will differ from country to country. Premium and market size measures will also be influenced by the role of the public sector in risk provision, for example, through the size and nature of the national social security scheme, and the extent that public sector agencies provide insurance for motor and workplace injury. However, it is suggested that these measures can be used if they are interpreted as “broadly indicative” of trends and levels.

> 2 For example, in the case of supervisory and regulatory reform agendas, a liberalizing market suggesting more market entrants would imply attention to licensing regimes and processes and other market entry criteria whereas a consolidating and intensively competitive market could suggest priority be give to any weaknesses in transfer and amalgamation, acquisition, and wind up provisions.

> 3 The data are sourced primarily from AXCO for market share data, company numbers, premium size, and exchange rates. Swiss Re Sigma was sourced for data on insurance penetration (premium to GDP) by country. (See Annex: References for more information) 4 Although the Herfindahl Index is a function of market shares, these other figures are also widely cited particularly by analysts who do not make use of the Herfindahl calculation.

5 In some cases, the number of companies has been estimated based on the number implied in the standard table prepared from the source data set and the addition of the “other” group at the minimum number implied. As such, the result will not be, in all cases, equal to the actual number of licensed companies in the market. In addition, companies that are recorded with a zero premium are treated as not being in this value.

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