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Impact of insurers’ technology accessibility as private information on market structure

Published online by Cambridge University Press:  13 May 2025

Jieyu Lin Open the ORCID record for Jieyu Lin [Opens in a new window]  and
Yan Zeng Open the ORCID record for Yan Zeng [Opens in a new window]
Jieyu Lin
Affiliation:
Faculty of Business, Lingnan University, Hong Kong, PR China
Yan Zeng*
Affiliation:
Lingnan College, Sun Yat-sen University, Guangzhou, PR China
*
Corresponding author: Yan Zeng; Email: [email protected]
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Abstract

This paper develops a theoretical framework to examine the technology adoption decisions of insurers and their impact on market share, considering heterogeneous customers and two representative insurers. Intuitively, when technology accessibility is observable, an insurer’s access to a new technology increases its market share, no matter whether it adopts the technology or not. However, when technology accessibility is unobservable, the insurer’s access to the new technology has additional side effects on its market share. First, the insurer may apply the available technology even if it increases costs and premiums, thereby decreasing market share. Second, the unobservable technology accessibility leads customers to expect that all insurers might have access to the new technology and underestimate the premium of those without access. This also decreases the market share of an insurer with access to the new technology. Our findings help explain the unclear relationship between technology adoption and the market share of insurance companies in practice.

Keywords

Technology accessibilityasymmetric informationcompetitive equilibriuminsurance market structuredigitalizationD40D82G22O33
Type
Research Article
Information
ASTIN Bulletin: The Journal of the IAA , First View , pp. 1 - 21
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of The International Actuarial Association

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