Corporate forms and organisational choice in international insurance

CORPORATE FORMS AND ORGANIZATIONAL C H O I C E I N I N T E R N A T I O N A L IN S U R A N C E Corporate Forms and Organizational Choice in International Insurance Edited by ROBIN PEARSON AND TAKAU YONEYAMA Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Oxford University Press 2015 The moral rights of the authors have been asserted First Edition published in 2015 Impression: All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2015938193 ISBN 978–0–19–873900–5 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work Acknowledgements The editors wish to thank the Dai-ichi Life Insurance Corporation for its generous support for the research project upon which this book is based We offer our sincere thanks to Ms Yukie Owada and Ms Yuki Fukui, assistants at Hitotsubashi University, who handled the administrative side of the project with great skill and efficiency We are also most grateful to those colleagues who not appear as chapter authors in this volume but who nevertheless made invaluable contributions during the course of the project, namely Christopher Kopper, Tim Guinnane, Heather Nelson, André Straus, and Jochen Streb We thank the anonymous readers for Oxford University Press for their insightful comments on an early draft and last, but not least, we wish to thank the team at OUP, in particular Clare Kennedy and David Musson, for their patience and support in helping us bring this book to publication Robin Pearson and Takau Yoneyama Contents List of Figures List of Tables Notes on Contributors Corporate Forms and Organizational Choice in International Insurance: An Overview of the History and Theory Robin Pearson and Takau Yoneyama ix xi xv Part I The Variety, Choice, Governance, and Regulation of Organizational Forms Tsuneta Yano, Founder of the First Mutual Company in Japan: Was He an Obstinate Mutualist? Takau Yoneyama Organizational Choice in UK Marine Insurance Robin Pearson and Helen Doe Risk Management by Mitsubishi: From Self-Insurance to Captive Insurance Hisaaki Kamiya The Survival and Success of Swedish Mutual Insurers Mats Larsson and Mikael Lönnborg Organizational Forms in Insurance: A Comparison of the USA and Germany during Industrialization Robin Pearson 29 47 68 93 114 Part II Mutual Insurance Organizations in Uncertain Environments The World Insured South Africa: Early Insurance Activities of Insurance Companies in South Africa, 1820–1910 Grietjie Verhoef 145 Business Strategies under Conditions of Uncertainty: The Rise of Mutual Life Insurers in Colonial Australia Monica Keneley 169 Support for Mutual Insurance Companies during the Franco Dictatorship (1939–75) Jerònia Pons Pons 193 viii Contents Part III The Performance of Different Organizational licio 296 endowment insurance 166, 230 England, see United Kingdom Equitable Life Assurance Society of New York 130n.63, 131, 133–4, 154–5, 158–9, 166 Eriksson, L 248 European Union 104, 112, 288, 290 Factory Insurance Association 135 ‘factory mutuals’ Fairbairn, John 156–7, 159 Fatal Accidents Act (1846) 60 Fatal Accidents (Damages) Act (1908) 61, 61n.47 Federación de Mutualidades de Catala 206, 206n.25 federal deposit insurance 19 Federal Emergency Management Agency (US) 15 ‘FET y de las JONS’ 207 Feuercasse (insurance fund) 4, 122–3, 123n.30–1 Financial Services Modernization Act 1999 (US) 284 Finanzas Mapfre 292 Finland Fire Aid 94–5, 106 ‘fire contracts’ (Hamburg) 4, 122 fire guilds (Brandgilden) 122, 122n.28 fire insurance in Canada and corporate self-insurance 69 development of 4–5 in early Sweden 94 farmers’ mutuals in Canada first to penetrate colonial markets 145 in Germany 121–4, 122 and Mitsubishi 73 and Norwegian mutuals 16 in South Africa 149–55, 150n.21, 158–60, 161–2 in Spain 194, 194n.2, 202 and Spanish mutuals 196 in Sweden 6–7, 18, 98–9, 253 and Tsuneta Yano 43–4, 44n.31 in the United States 119–21, 119–20, 135–6, 138 323 Fire Offices Committee of London 150 firm-effect model 258 First International Congress of Actuaries (Brussels) 34 Folket 108 Folksam 100, 103, 107–11, 109n.38–9, 250 Fortis 14 France 7–8, 10–11, 12, 18n.87, 39n.8 Franco, General 193–4, 197, 199–200, 205, 209, 212–13, 286, 289 Friendly Insurance 56 Fujisawa, Dr Rikitaro 31 Fukuhara, Arinobu 230 Fukuzawa, Yukichi 39, 226 funded pension plans 105 Galicia S A 210 Generali (Italy) 284, 296 Germany emergence of compulsory contribution employment-based social insurance 11 fire insurance in 121–4, 122 German miners’ insurance associations 11–12 and Knappschaften leading insurance market before 1914 114–16 life, health, and accident insurance 124–6, 126n.47/49, 127, 128, 132–3, 137–40 marine and transport insurance in 116–17 mutual property-casualty insurers in 18n.87 mutuals in 123, 125–6, 133 non-life insurance markets 140–1 and specialist reinsurance Gibrat’s law 253 Gloster, J 265 Gloucester and Severn Estuary Mutual Marine Insurance Society 63 gold rushes 146–7, 160, 172, 176, 182–3 Golden State Financial Corporation 268 Golden State Minority Foundation 279 Golden State Mutual Agency Club 277 Golden State Mutual Life Insurance Company (GSM) community-specific factors 273–6 conclusions 278–83 demutualization planning of 268–9 firm-specific factors 276–8 formation and development of 267–8 introduction 23, 263–4 market-specific factors in 269–71, 270–2, 273 political-specific factors 276–8, 277n.56 Gotha Life Insurance Bank, see Gothaer Lebens-versicherungsbank 324 Index Gothaer Lebens-versicherungsbank 34, 36, 43, 125, 133 Graham, Colonel John 147 Grahamstown Journal 155 Gram (Grupo Asegurador Mutuo) 288–9 Gray, A C 180 Great Fire of London Great Kanto Earthquake 89 Gregorio y Villota, Isidro de 210, 286 Gresham 183 Greve, Henrich R 16 Groningen Guardian Assurance and Trust Company 159 Guardian Life Insurance 265 Guindos, A De 208 Guinnane, Timothy W 11 Hagel-Assekuranz Verein (HAV) 139–40 hail insurance 139–40 Hamburg Hansmann, Henry 19, 20, 20n.94, 37, 157, 170, 241 Harbours, Docks and Piers Clauses Act (1847) 60 Harrington, Scott E 69 Hatsune Maru (steamship) 73 Hausman test 256 health insurance 128–40, 129, 129n.57, 130n.59 Henderson, A B 265 Henry Head and Co 74, 87 Hermes (later Hermes S A.) 210 Herndon, Alonzo F 266 heteroskedasticity 256 Higgs, H 285 Hiramatsu, Jinshiro 238 Hirao, Hachisaburo 89–90 Hohne and Redelinghuys (auditors) 154 ‘Holding Companies, Mergers and Acquisitions in the Insurance Industry’ (AMA) 282 Horai life 38, 42, 229 Horwood, Sir Arthur Owen 149 Houghton, John 149 Houston, Norman B 274 Hyde, James 133 Imperial German Insurance Bureau 12 Imperial Liability Law 1871 (Germany) 126 Imperial Marine Insurance Company 71 In Expectation of the Establishment of a NonProfit Based Life Assurance Company (Yano-pamphlet) 33, 35 Indemnity Marine 58 Independent Order of Rechabites 178 India 64 Industrial Assurance Company of South Africa 166 industrial insurance accident 196, 205–6 in Spain 203, 203n.22 in Sweden 95, 253 Industrial Life Assurance Company of South Africa 149, 162 informational hypothesis 245–7 ING (Netherlands) 14, 284 INI (Instituto Nacional de Industria) 206 Inmobiliaria Mapfre, see Mapfre Investments Institute of London Underwriters 59 insurance economics of organisational forms 15–20 history of 5–15 structure of book 20–6 Insurance Act 1903 (Sweden) 96, 251–2 Insurance Business Act 1900 (Japan) 30–2, 35–6, 44, 46, 82, 82n.44, 91, 217–18, 218n.3, 224 Insurance Business Law 1948 (Sweden) 96–102, 251 Insurance Code of the State of California 267 Insurance Company of North America 118 Insurance Inspection Board (Sweden) 98–100, 98n.16 Insurance Workers International Union 277 International Group of P&I clubs 64; see also London Group International Transport Insurance Association (Germany) 117 investment trust companies (ITCs) 287 Iran 12 Iwakura Mission 30, 30n.6–7 Iwasaki, Hisaya 68, 238 James, Harold 114 Japan burial societies and compulsory state-run industrial life assurance 12 exchanging the American business model 293 first modern life assurance company in 30–1, 35 and ‘Kyosai’ and Mitsubishi Goshi Kaisha 22, 68 and P&I clubs 65 premium-based and assessment-based mutuals 10 and Tsuneta Yano 29 see also Japanese mutuals; Mitsubishi Japan Doctors Kyosai Life 38 Japanese Company Act (1893) 31 Japanese mutuals .. .CORPORATE FORMS AND ORGANIZATIONAL C H O I C E I N I N T E R N A T I O N A L IN S U R A N C E Corporate Forms and Organizational Choice in International Insurance Edited by ROBIN PEARSON AND. .. employment-based social insurance 11 fire insurance in 121–4, 122 German miners’ insurance associations 11–12 and Knappschaften leading insurance market before 1914 114–16 life, health, and accident insurance. .. fleet 64 fire insurance in 119–21, 119–20, 135–6, 138 first insurance companies 3, 5–6 and guaranty funds against insurer insolvency 19–20 and large insurer-financial groups 284 leading insurance market