On equilibrium efficiency in non-life insurance market.

The paper investigates the dynamics of equilibrium efficiency in the non-life insurance market, emphasizing the role of cooperation in shaping premium formation. The premium is influenced by two key factors: the external effect of competitors premium and policyholders’ behavior: latter can react to a change in premium by choosing another insurance contract. Regulators can analyze insurers’ behavior – whether it is competitive or collusive– by observing their adjustments to premiums in response to regulatory constraints. This behavior reveals the underlying strategies insurers adopt to balance profitability and market dynamics. In details, the study adopts the standard model, in which insurers choose the premium price in order to maximize the expected profit. The competition case is analysis by Taylor (1986) and (1987), Polborn (1998), and Dutang et al. (2013), here we propose a concept of collusive solution, which is a refinement of Pareto optimal allocation.