The Wealth Effects of Allowing Bank Entry into the Insurance Industry

Although various sales channels exist for insurance products, no existing research compares their sales efficiency. This study offers a comparison of bancassurance and traditional sales channels in Taiwan. Using a data envelopment analysis approach, this study first computes the efficiencies of bancassurance and traditional sales channels separately. The efficiency score of the traditional sales channel is significantly higher than that of a comparable bancassurance channel. Furthermore, the efficiency relationship between the bancassurance and the traditional sales channels is independent. These findings have significant implications for the insurance industry and ongoing research in this field.

Section: The Efficiency Of Insurersmentioning

confidence: 99%

A Comparison of Bancassurance and Traditional Insurer Sales Channels

Chang

Peng

Fan

2011

“…20 Carow (2001b). 21 In essence, Carow (2001b) examines the theory of contestable markets, where structures other than perfect competition may be optimal. 22 Carow and Heron (2002).…”

Section: A Brief Look At the Literaturementioning

confidence: 99%

“…Recent empirical 19 Johnston and Madura (2000). 20 Carow (2001b). 21 In essence, Carow (2001b) examines the theory of contestable markets, where structures other than perfect competition may be optimal.…”

Section: A Brief Look At the Literaturementioning

confidence: 99%

Business Opportunities and Market Realities in Financial Conglomerates

Staikouras

2006

The Financial Services Act of 1986 prompted changes to remove the regulatory hedges among financial institutions. The present work sets out to explore the non-quantitative aspects of the interface between banks and insurance firms. Without discounting any quantitative analysis, the study diverts from the existing literature by placing equal weight to the so far overlooked qualitative elements. The paper reviews the various market trends and highlights the differences among major European countries. The diverse and inconclusive bancassurance literature is also briefly reviewed. Having discussed the cultural differences and integration obstacles between banks and insurance firms, the study proposes a three-dimensional radar-shape approach for the financial conglomerate. More specifically, product complexity, distribution infrastructure and market integration are put forward as the forcing variables underlying the provision platform of modern hybrid financial services. The analysis further elaborates on a number of market-based synthetic corporate structures drawn from the European experience as a whole. Finally, two broad drivers -exogenous (market) and idiosyncratic (operational and strategic) -along with their constituents, mainly held responsible for the success/risk of the new universal financial intermediary, are identified and analysed. The paper concludes by summarizing the main issues and pointing to avenues for potential research.

“…We investigate this by estimating fixed-effects regressions in which the effect of 57 Lipton and Lorsch (1992), Jensen (1993). 58 Carow (2001).…”

Section: Effects Of Demutualisation On Firm Performance and Financialsmentioning

confidence: 99%

Demutualisation, Control and Efficiency in the U.S. Life Insurance Industry

Xie¹,

Lu²,

Reising

et al. 2011

This paper examines the role of corporate governance in the demutualisation wave in the U.S. life insurance industry during the 1990s and 2000s. The efficiency hypothesis suggests a firm should experience improved performance after demutualisation and managers should only gain from superior performance. Alternately, the managerial welfare hypothesis proposes that executives gain independence of company performance. This research suggests that demutualisation is value-enhancing for firms converting through initial public offerings (IPOs), but value-neutral for firms that convert but stay private. Firms converting into public companies experience increased CEO turnover that leads to efficiency improvement. CEOs of these firms receive higher compensation after demutualisation, but most of the gain is due to a jump in incentive compensation. Firms converting but staying private do not have a similar significant increase in CEO compensation. Overall, our results provide evidence that value-enhancement, not private managerial welfare, motivates demutualisation.