Efficiency Analysis of the U.S. Publicly Held Insurance Industry: A Two-Stage Efficiency Model

Mary Kay Copeland and Emilyn Cabanda
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Mary Kay Copeland: Rinker School of Business, Palm Beach Atlantic University, West Palm Beach, FL, USA
Emilyn Cabanda: School of Business and Leadership, Regent University, Virginia Beach, VA, USA

International Journal of Information Systems in the Service Sector (IJISSS), 2018, vol. 10, issue 1, 1-15

Abstract: This paper aims to measure and analyze the efficiency of the US publicly-held insurance industry from 2011 to 2013. The paper uses a two-stage efficiency model: (1) data envelopment analysis (DEA), a non-parametric model for measuring the efficiency of 141 panel data of US publicly-held insurance firms, and (2) stochastic Tobit regression model for determining associations between insurers' financial performance and efficiency. Three significant findings are obtained: (1) There is no evidence that US insurance firms consistently improve in efficiency over time using the input-output mix. (2) There is an overall positive significant association between insurers' financial performance and technical efficiency at a very high confidence level. (3) Type of insurance is found to have a negative and significant effect on efficiency. These new findings add empirical evidence to the efficiency analysis of the US insurance industry.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jisss0:v:10:y:2018:i:1:p:1-15

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