Competitive dynamics and risk of non-life insurance in Taiwan: An empirical study

This study applies the panel smooth transition regression model to a 13-year sample of 16 Taiwanese non-life insurance companies to examine market competition's impact on Asset risk.

Underwriting risk Investment risk and differentiate between financial holding companies (FHCs) and non-FHCs (NFHCs). For NFHCs, increased competition reduces asset risk in high-leverage firms, supporting the modified moral hazard hypothesis. For FHCs, greater competition lowers asset risk only above a leverage threshold, indicating superior risk management and affirming the competition stability hypothesis. The effect on underwriting and investment risks depends on operational tenure; below a certain threshold, competition increases underwriting and investment risk, whereas competition above the threshold decreases risk, showing that experience improves risk management. This study offers key insights into how competition influences risk across different types of insurance companies in Taiwan.