Measuring the Output of Life Assurance Companies

O’Brien, Chris

doi:10.1057/gpp.1991.17

Cited by 9 publications

(4 citation statements)

References 19 publications

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“…8) writing that FV is "highly correlated with the volume of premium income" (anyway). Furthermore, some researchers convey that policy count may be flawed as an output proxy due to a heterogeneity of insurance policy contracts (Hammond, 1971;O'Brien, 1991) including dissimilar needed requirements for several reasons (Cummins, 1977).…”

Section: Output Proxies: Premiums and Investment Incomementioning

confidence: 99%

Life insurance company efficiency: best method and proxies

Wise¹

2018

Insurance Markets and Companies

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Life insurance is a very important segment of the economy of most countries as demonstrated by the investments, premium revenue and numbers employed. Hence, it is paramount to determine accurately how well life insurance companies (LICs) perform and how viable they are for the benefit of both other industries and national economies.Three papers that investigate LIC efficiency directly analyze how efficiency affects LIC profits. One critical feature is that they show that the inefficiency of LICs can greatly affect their (financial) outcome and ultimately their survivorship. Thus, said research clearly indicates that life insurer efficiency is a crucial area to investigate and assess and that it could greatly enhance the ability to properly monitor and inspect the life insurers.This article co-ordinates information regarding life insurance efficiency studies to help researchers learn which approaches, methods and output/input proxies to use. While some papers do so for some of the aspects that are important and necessary for life insurance efficiency studies, this is the first to deal with said aspects together. More specifically, this paper especially considers and evaluates the different methods and output proxies used in life insurance efficiency studies, as they seem to be the elements where the most disagreement exists between researchers. In addition, this article is unique in examining how input (proxy) prices are used in life insurance efficiency studies.

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Section: Output Proxies: Premiums and Investment Incomementioning

confidence: 99%

Life insurance company efficiency: best method and proxies

Wise¹

2018

Insurance Markets and Companies

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“…Again, the majority of early studies can largely be disregarded, since they use the restrictive Cobb-Douglas production function. Similarly to the banking studies, there is some disagreement as to the right output measure of the insurance firm (see, for example, Homstein and Prescott, 1989;O'Brien, 1991). This debate seems less fundamental, however than for banking: the most comm on o u tp u t measure is prem ium income (either gross or net of reinsurance), while some authors have argued in favour of "total claims".…”

Section: Economies Of Sizementioning

confidence: 99%

Cross-Border Entry in European Retail Financial Services: Determinants, Regulation and the Impact on Competition.

Kinsella

Hoschka²

1995

The Economic Journal

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Motivation and objectives of the thesisMost retail financial services in the European Community (EC) have for a long time been characterised by a low degree of cross-border penetration and competition. This market fragmentation stemmed partly from government regulations obstructing free movement of capital, freedom of establishment and provision of services in the EC. Not surprisingly, therefore, the 1988 Cecchini-report concluded that in the European financial services sector "... m arket openness, competition and low cost-efficiency is often deliberately not assured". This lack of cross-border market penetration is supposed to change with the advent of the European internal market in 1993 after the adoption of the Single E uropean Act and various EC Directives concerning financial services. The im plem entation of these measures in the financial services sector is predicted to lead to overall price reductions by 10% and a rise in European GDP by 1.5 % over a five-year period which accounts for a third of the total projected effects of the 1992 programme.1 In addition, the changes in the regulatory regime are expected to im pact significantly the current structure, conduct and performance of the financial services industry. As the Banking Advisory Committee of the Commission of the EC (1988, p. 13) comments, for example, the new Directives "will result in the banking system undergoing fundamental and perhaps dramatic changes". Similarly, for insurance services, a practitioner claims that "operators will face dramatic changes in the near future ... which can be summarized by just these two single words: increased competition" (Bebear, 1990, p.359). Other academic com m entators predict that "w hether the 1992 deadline is m et or not, financial m arkets will dramatically change to the point of bearing little resemblance to w hat they used to be" (Huveneers and Steinherr, 1990, p.3). Are such predictions realistic or do they overestimate the potential impact of regulatory reform?Consider the mechanism which is supposed to bring about the changes in European financial services. According to the Price Waterhouse study on financial services which is part of the 'Cecchini Report', the large-scale economic study on the costs of market barriers between the EC countries, price differences across Member States will be gradually eliminated as the EC moves closer to financial integration. The report envisages two prerequisites for attaining greater price convergence: first, a "legislative {EC} programme 1 See Cecchini-Report, European Economy, 35,1988, p. 86. 7 Tirole (1988) notes that "industrial organisation theorists have often felt more comfortable with case studies than with statistical analysis -perhaps because it may be easier to recover the industry's basic conditions and behavior from rich case studies than from selective statistics ...". ® Neven (1990, p.175), for example, notes that "the United States could be a laboratory experiment for European deregulation".In the sixth chapter statistical data on the extent o...

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“…If this component is sizeable then parameter estimates will be meaningless biased and inconsistent (Johnston, 1960). C. D. O'Brien (1989) also rejects the use of premiums as an output indicator because of their transfer element. Such problems have been dealt wiith at length by N. A.…”

Section: How Should Output Be Measured?mentioning

confidence: 99%

Economies of Scale in UK Life Insurance Companies: An Empirical Approach

Kaye

1991

Geneva Pap Risk Insur Issues Pract

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Measuring the Output of Life Assurance Companies

Cited by 9 publications

References 19 publications

Life insurance company efficiency: best method and proxies

Life insurance company efficiency: best method and proxies

Cross-Border Entry in European Retail Financial Services: Determinants, Regulation and the Impact on Competition.

Economies of Scale in UK Life Insurance Companies: An Empirical Approach

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