Analysis of the Relationship Between the Market Structure and Performance: a Case Study of the Insurance Industry in Algeria

Abstract

This study aims at analyzing the relationship between market structure and the performance of the
insurance companies in Algeria's property and casualty insurance market by adopting the model of
analysis in the industrial organization (SCP); (Structure-Conduct-Performance). Moreover, the
study is based on the hypothesis of existence of a Mutual Influence between market structure and
performance. Accordingly, the study sample is included ten insurance companies during the period
between 2007 and 2015. A simultaneous equation is employed to estimate the parameters of the
model, relying on Two-Stage Least Square (2SLS) and Three-Stage Least Square.

On the whole, the study concludes that Algeria's property and casualty insurance market is
characterized by a monopoly structure and heading towards competition, the study also dictates the
existence of impact between the structure of the insurance market and the performance of insurance
companies operating in it, this effect is negative between the two variables in both directions,
which means rejection of the structure-Conduct-performance paradigm hypothesis, that is, public
insurance companies that control the insurance market do not benefit from the dominant position in
making unusual profits, and they are far from monopolistic behaviors