Competition, Efficiency, and Soundness in European Life Insurance Markets

Cummins, J. David; Rubio‐Misas, María; Vencappa, Dev

doi:10.2139/ssrn.2796600

Cited by 26 publications

(56 citation statements)

References 52 publications

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“…In this study, we also consider the decision on the level of assets under management in order to analyze the efficiency of insurers’ accounts receivable management and its effect on profitability (see Cummins et al., 2017). We would expect a positive relationship between this ratio and insurers’ profitability.…”

Section: Background and Literature Review On Firm Decision Variablesmentioning

confidence: 99%

“…The minimum regulatory solvency of every insurer over the analyzed sample period is calculated based on its activities and the insurer's solvency margin includes the insurer's net worth free of any expected commitments minus illiquid assets. Reinsurance utilization is calculated as the ratio of ceded premiums to direct premiums plus reinsurance premiums assumed (see e.g., Weiss and Choi, 2008). The leverage variable that we use in the analysis is defined as debt financial capital to total assets. We use the ratio of invested assets to total assets to control for the efficiency of insurers’ accounts receivable management (see Cummins et al., 2017). Following Cummins and Nini (2002), we include the premiums growth variable, defined as ((premiums at time t /premiums at time t −1) −1). The corporate diversification variable is constructed by the standard approach that is based on a Herfindahl concentration index of net premiums written across business lines (e.g., Mayers and Smith, 1994; Berry‐Stölzle et al., 2012; Biener et al., 2016).…”

Section: Data Sources and Variable Definitionmentioning

confidence: 99%

“…We use the ratio of invested assets to total assets to control for the efficiency of insurers’ accounts receivable management (see Cummins et al., 2017).…”

Section: Data Sources and Variable Definitionmentioning

confidence: 99%

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Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

González‐Fernández

Rubio‐Misas

Ruiz

2020

Int Trans Operational Res

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This paper applies a multiobjective goal programming (GP) model to define the profile of the most profitable insurers by focusing on 14 firm‐decision variables and considering different scenarios resulting from the exogenous change in interest rate and GDP per capita growth variables. We consider a detailed database of Spanish non‐life insurers over the period 2003–2012 taking into account two dimensions of insurers’ results: underwriting results and investment results. A prior econometric analysis is used to find out relevant relations among the variables. Next, a GP model is formulated on the basis of the relationships obtained. The model is tested in a robust environment, allowing changes in the coefficients of the objective functions, and for several scenarios regarding crisis/noncrisis situations and changes in interest rates. We find that having the stock organizational form, being an unaffiliated single company and maintaining low levels of investment risk, leverage, and regulatory solvency are recommended for result optimization. Growth and reinsurance utilization are not advisable for optimizing the results, whereas size should be positively emphasized even more in instability periods and when interest rates increase. The results also show that the optimal level of the diversification/specialization strategy depends on economic conditions. More specialization is advisable as negative changes in interest rates increase. However, we find that the optimal values of the diversification variable are higher for the crisis scenarios compared to the corresponding noncrisis scenarios, suggesting that diversification creates value in crisis. Further sensitivity analyses show the soundness of the conclusions obtained.

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Section: Background and Literature Review On Firm Decision Variablesmentioning

confidence: 99%

Section: Data Sources and Variable Definitionmentioning

confidence: 99%

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Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

González‐Fernández

Rubio‐Misas

Ruiz

2020

Int Trans Operational Res

View full text Add to dashboard Cite

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“…Increased competition between companies will make the company more driven to improve its services and improve efficiency [6]. This study, supported by Eling & Schaper [7], identified the impact of environmental changes on productivity and efficiency on European life insurance.…”

Section: A Hypothesismentioning

confidence: 92%

“…Strong competition has the potential to increase managerial pressure in reducing slackness and improving efficiency [5]. The study by Cummins, Rubio-Misas, Vencappa [6] stated that increased competition could make insurance companies change from being inefficient to efficient, hence, the company became healthier. Changes in the productivity environment had an impact on increasing the efficiency of insurance companies because the business environment became increasingly challenging [7].…”

Section: Introductionmentioning

confidence: 99%

Efficiency Analysis of Private Insurance Firms Before and After The Application of BPJS Regulations

Viverita¹

2019

Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)

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This study aims to examine the efficiency of Indonesian private health insurance following the application of Badan Penyelenggara Jaminan Sosial (BPJS), Indonesia's Social Insurance Administration Organization's regulations in 2014. This study compares the level of efficiency using data envelopment analysis (DEA) output orientation. Also, this study uses financial statements from 18 private insurance firms during the years 2009 to 2016. The results of this study show that, following the application of BJPS regulations, there have been no significant differences in firms' efficiency than before the application. In addition, we find that the efficiency of the joint venture health insurance companies decreased, while local health insurance efficiency increased during the observation period. This is because of a significant decline in investment returns for the joint venture health insurance companies in 2015. The results of this study are in accordance with the results of another study [16], where efficiency improvements only occur in small companies.

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How efficient is Indian health insurance sector: An SBM‐DEA study

Siddiqui

2021

Manage Decis Econ

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The aims of this study are to investigate the technical efficiency and productivity growth of the Indian health insurance sector and to test the conglomeration hypothesis versus the strategic focus hypothesis for providing new evidence on economies of scope. This study has analyzed the efficiency and productivity performance of the 27 health insurance companies from the period 2015 to 2019 using slack‐based measurers (SBM) of data envelopment analysis. The Malmquist index has been used to evaluate the productivity of health insurers. The Mann–Whitney test is used to investigate the conglomeration hypothesis versus the strategic focus hypothesis. Findings indicate that Indian health insurance industry experienced significant fluctuations in mean technical efficiency during the study period. Almost 30% of the health insurers operated efficiently during the study period. Almost half of the health insurers experienced growth during this period. The Indian health insurance sector grew at an annual average rate of 3.78% during our study period. We further found that the stand‐alone health insurers operated more efficiently than the health insurance units of the general insurers in the Indian health insurance sector. This study is first of its kind that brings into light the operating characteristics, efficiencies, and productivity of the Indian health insurance sector. This study will be helpful to the regulators, decision makers, and other stakeholders. The policy makers of health insurance companies can improve their efficiency after knowing the reasons of inefficiency. The managers of inefficient health insurers may expedite measures to improve efficiency by better utilization of existing resources and technological improvements.

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Competition, Efficiency, and Soundness in European Life Insurance Markets

Cited by 26 publications

References 52 publications

Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

Efficiency Analysis of Private Insurance Firms Before and After The Application of BPJS Regulations

How efficient is Indian health insurance sector: An SBM‐DEA study

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