ABSTRACT
Businesses that operate in the insurance market have long held contradictory attitudes to competition. The Swedish insurance industry provides a good example of these contradictions. On one hand, in the area of premiums and terms of insurance there are examples of fierce competition; on the other hand, there are also numerous examples of collusive organisations and formal and informal agreements that are far from the concept of ‘free competition’. There are several reasons for these contradictions. For example, to establish reasonable premiums, experience-based information from a large number of companies is required; something, which is facilitated by collusion between companies. Moreover, the act of reinsurance means information about premiums and terms of insurance are spread among companies. As life insurance typically involves long contract periods the industry has argued that it is important to avoid ‘unsound’ competition that could hurt the reputation of the business at large. It has been considered essential for the legitimacy of the industry that individual corporations have not been forced to liquidate, since this might lead to a decrease in confidence which might have been devastating for the entire industry. Insurance companies have thus agreed on common formal rules of the game but also on informal honorary codes within the industry to maintain a ‘sound’ and ‘fair’ competition.
