Switching costs in the Swedish insurance industry: the case of private pension insurances and the effect of deregulating switching barriers
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
The Swedish private pension insurance industry has experienced several important legislative amendments in recent years, which has altered the conditions for market players on both the supply side and the demand side. The one change that is most important for the purpose of this paper is the introduction of transfer rights in 2007 and this change is likely to influence market dynamics where switching costs play a crucial role. The first part of this paper investigates in what way switching costs has been affected by this alteration. Secondly, this paper will challenge the model created by Shy (2002). The model is constructed to estimate switching costs in a simple way. The results suggest that switching costs necessarily has not decreased in connection with the market opening up. There are no significant outcomes supporting the hypothesis of lower switching costs with the introduction of transfer rights. Further, in evaluation of the model by Shy (2002) it seems as if the model is excessively simple. The model omits essential information in its estimation of switching costs. In line with recent theories, I suggest that quantification of advisors contribution is important and needs to be added to the existing model. Future research should focus on testing the model on data from other industries in order to determine its capability.
Place, publisher, year, edition, pages
2016. , 42 p.
Switching costs, private pension insurances, transfer rights, asymmetric information
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-189517OAI: oai:DiVA.org:kth-189517DiVA: diva2:946468