Ownership and Governance in the Insurance Industry: A Review of the Theory and Evidence

Abstract

The objective of this paper is to review the coexistence of mutual and proprietary insurance companies from a corporate governance perspective.The paper begins by reviewing the theoretical justification for the existence of mutual and proprietary companies in the insurance industry. The paper then examines the empirical evidence on insurance company performance and seeks to identify whether organisational structure influences managerial behaviour. Finally, the paper analyses the impactof insurance conversions (i.e. mutualisation and demutualisation) on the welfare of po1icyholders,shareholders and managers in order to identify whether the conversion process is motivated by efficiency or expropriation objectives.