Current events in insurance: Three essays on capital, learning, and geography

This dissertation combines three essays on topics related to the industrial organization of insurance markets. The unifying theme is that each essay addresses an empirical aspect of a topic of current interest in the academic literature on insurance markets. The first chapter utilizes policy-level insurance data to test a theory of asymmetric information among competing insurance companies, providing a contribution to the empirical literature on asymmetric information in insurance markets. The second chapter uses a novel firm-level dataset of European insurance companies to compare the operating efficiency of domestic versus foreign insurers. The results of this work are important in understanding the role of geography and globalization in the financial service industry. The third chapter uses a frontier efficiency methodology to test hypotheses concerning the build-up of equity capital in the U.S. property-liability industry during the late 1990s. In addition to testing a variety of theories about capital structure, the work identifies a penalty associated with holding excess financial capital. In concert, these three essays provide a contemporary look at important issues in insurance economics