COMPETITION AND OPTIMAL STRUCTURE IN THE INSURANCE BRANCH

In this article the author analyses insurance markets. Insurance busin ess is in many countries a very regulated branch. The reason for a str ict regulation of the insurance market is the risk of bankruptcy. The risk of bancruptcy increases as a result of harsh competition. In the article the problems of imperfect information and adverse selection on insurance markets is also dealt with. Moreover, the author outlines s ome specific problems concerning the Finnish insurance markets. Insura nce is typically a ''local business''. In Finland the geographical str ucture, i.e. large distances and a small population, causes problems o n the insurance market.