Consolidation and Efficiency in the major European Insurance Markets

The survivorship principle posits that likelihood of firms surviving over time is associated with their degree of business diversification. This paper examines this issue in the context of the long-term regulatory efforts to harmonise fragmented European regulatory environments, and examines the determinants of technical efficiency of acquiring insurance firms both in the pre- and post- financial crisis periods. Technical efficiencies are estimated over a period of significant consolidation and harmonisation of monetary and insurance regulation rules using data envelopment analysis modelling (DEA).We predict and find that the probability of being an acquirer is consistent with both technical efficiency and with the survivorship principle.