Product Specialization, Efficiency and Productivity Change in the Spanish Insurance Industry

Hugo Fuentes, Emili Grifell-Tatje and Sergio Perelman

CREPP Working Papers from Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège

Abstract: In this paper we analyze the levels of technical efficiency and productivity growth attained by Spanish insurance companies during a period of deregulation. We compute Malmquist productivity indexes using the estimates of parametric distance function for several specialized insurance branches. In this way, we show that branch specialization matters a great deal and that firms combining two or three product lines (Health, Property-Liabilities and Life) perform better than firms operating in one insurance line exclusively. In the light of these results, we recommend that the remaining restrictions coming from the European Third Directives on the operations of multi-branch firms should be removed. Moreover, from a management point of view, it would be appropriate to encourage the creation of multi-branch insurance firms. However, in all cases, the estimated scores indicate low productivity growth (less than 2% per year) compared with a huge increase in insurance activity (premiums were multiplied by nearly 3 in a decade).

Keywords: Efficiency; parametric Malmquist index; output specialization; Spanish insurance (search for similar items in EconPapers)
JEL-codes: C43 D24 G22 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (5)

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Working Paper: Product Specialization, Efficiency and Productivity Change in the Spanish Insurance Industry (2015)
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