Efficiency in the International Insurance Industry : A Cross-Country Comparison
Journal
Journal of Banking & Finance
ISSN
0378-4266
ISSN-Digital
1872-6372
Type
journal article
Date Issued
2010-07-01
Author(s)
Abstract
The purpose of this paper is to provide new empirical evidence on frontier efficiency measurement in the international insurance industry, a topic of great interest in the academic literature during the last several years. A broad efficiency comparison of 6462 insurers from 36 countries is conducted. Different methodologies, countries, organizational forms, and company sizes are compared, considering life and non-life insurers. We find a steady technical and cost efficiency growth in international insurance markets from 2002 to 2006, with large differences across countries. Denmark and Japan have the highest average efficiency, whereas the Philippines is the least efficient. Regarding organizational form, the results are not consistent with the expense preference hypothesis, which claims that mutuals should be less efficient than stocks due to higher agency costs. Only minor variations are found when comparing different frontier efficiency methodologies (data envelopment analysis, stochastic frontier analysis).
Language
English
Keywords
Efficiency
Data envelopment analysis
Stochastic frontier analysis
Conditional mean approach
International insurance markets
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
34
Number
7
Start page
1497
End page
1509
Pages
13
Subject(s)
Division(s)
Eprints ID
57595