Diversification–Performance Nexus in Insurance: A Systematic Review and Institutional–Contingency Framework

This systematic review examines why empirical studies report conflicting effects of diversification on insurer performance and under what governance, risk-management, and institutional conditions diversification creates or destroys value. Following a PRISMA 2020-guided search of Scopus, Web of Science, and Google Scholar, and after screening 238 of the 415 identified records, the review synthesizes 56 empirical studies and develops a multi-level institutional–contingency framework that integrates institutional theory, the resource-based view, and agency theory. The review finds that diversification premiums, discounts, and non-linear effects coexist across the literature rather than forming a single dominant pattern, because—across product, geographic, human capital, and technological diversification—outcomes depend on institutional context, governance quality, ERM maturity, and firm capabilities rather than on diversification per se. Theoretically, the review moves the field beyond a premium-discount binary by explaining how institutional conditions, resource-based execution capacity, and agency problems interact across contexts. Practically, it indicates that insurers should evaluate diversification as a governance-sensitive risk-management decision requiring ERM maturity, internal controls, and incentive alignment, rather than as a standalone growth strategy.