Financial Supervision, Financial Crisis and Life Insurance Companies: International Evidence in OECD countries

This paper is to examine and identify firm-specific determinants of profitability and to test the impact of regulatory system to life insurance companies in OECD countries. We consider two important agency structures of insurance industry supervision and regulations, prudential supervision and business conduct regulation. The agency structure of prudential supervision is significant in OECD countries, but not in Germany and the US. We found that FSA-type, excluding Germany and the US, may help insurers increase their profitability compared to the companies with Sectoral-type agency structure. Meanwhile, the agency structure of business conduct can also be found in OECD countries. This is because the business conduct is considered socially important in Germany and the US. FSA may lessen the insurer profitability, especially in Germany.