An Evaluation of Competition in Zimbabwe’s Short-Term Insurance Sector: An Application of the Panzar-Rosse Approach

Abstract – This paper is aimed at evaluating the nature of competition in Zimbabwe’s short-term insurance sector. Panel data from 19 short-term insurers was utilized from year 2010 to 2017, the author employed the Panzar-Rosse (1987) approach as a proxy for competition. Total Revenue and Premium Revenues were used as dependent variables while size, equity ratio and underwriting risk were used as control variables. The results from the empirical investigation showed that generally short-term insurers in Zimbabwe were operating under monopolistic competition for the better part of the period under review. Thus, findings from the research point out that competition was increasing during the period under review as witnessed by declining H-statistics. The findings of the study will add literature on competition in Zimbabwe’s financial sector and particularly the insurance sector. This is the first study to evaluate competition in the short-term insurance sector of Zimbabwe. To the best of the author’s knowledge, this examination is the first to assess competition in Zimbabwe’s short-term insurance sector.

Keywords: Panzar-Rosse, H-Statistics, Contestability

[Cite as: Musiiwa, R., and Dzingai, M. E. (2021). An Evaluation of Competition in Zimbabwe’s Short-Term Insurance Sector: An Application of the Panzar-Rosse Approach. Diverse Journal of Multidisciplinary Research, Vol. 3, Issue 2, Pages 1-12.]