Market Structure and Determinants of Firm Profitability on General Insurance Industry in Indonesia

The purpose of this study is to analyze the market structure of the general insurance industry in Indonesia and the effect of market share, operating expenses to operating income (OEOI), and debt ratio(DR) on profitability measured by return on assets (ROA). This study uses panel data regression analysis with the Chow and Hausman test to determine the best model. This analysis uses a combination of cross-section data, which consists of 11 companies, and time-series data, which consists of five years. The results showed that the Indonesian general insurance industry in 2014-2018 took the form of a tight oligopoly with a high concentration level after being analyzed through the four-firm concentration ratio (CR4) and Herfindahl-Hirschman Index (HHI). The average CR4 ratio is 84.77%, while the value of HHI is 3,374.19. Meanwhile, the results showed that based on panel data analysis, the OEOI variable has a significant negative effect on firm profitability. Also, the debt ratio variable has a significant negative effect on the profitability of general insurance firms in Indonesia. The firm efficiency can be able to increase profits rather than mastery of market share.