Risk management in the insurance industry from the perspective of market structure and based on the cost-of-transaction approach

The efficiency of the insurance market is not permanent and absolute and the market is not always working properly and so-called economists often fail to allocate resources efficiently. The philosophy of business oversight that is shaped by the market and operates according to its rules is to identify the failures of the market mechanism that lead to market failure. Accordingly, supervision in the insurance industry is also focused on dealing with market failures in this area. In this paper, we examine the risk management in the insurance industry based on the methodological framework of the economics of transaction costs, from the perspective of the structure of the insurance market in Iran. The results of the analysis showed that the reality of the insurance market of the country has a significant deviation from the conventional and favorable economic frameworks, which is considered by the policymakers and legislators (Creating a conventional competitive environment free from insufficiency and failure); and in this unconventional environment, many market-based laws and regulations and policies not only don't reduce transaction costs to develop and expand insurance institutions but also reinforce divergent risk structures at the level of insurers and It will have anti-development and destructive effects.