Organization and efficiency in the international insurance industry: A cross-frontier analysis

Christian Biener and Martin Eling

European Journal of Operational Research, 2012, vol. 221, issue 2, 454-468

Abstract: This paper employs cross-frontier analysis, an innovative tool based on data envelopment analysis, to provide new insight into the relationship between organization and efficiency in international insurance markets. We are the first to empirically test the expense preference hypothesis and the efficient structure hypothesis in a large cross-country study. For this purpose, we consider 23,807 firm-years for 21 countries from northern America and the European Union—a dataset not previously analyzed in this context. We find evidence for the efficient structure hypothesis in selected market segments, but we find no evidence for the expense preference hypothesis. Our results provide insight into the competitiveness of stock and mutual insurers from different countries. At the country level, the results can be used to compare different insurance markets. Our findings are especially interesting for the strategic management of insurance companies as well as for regulators and boards of national insurance associations.

Keywords: Data envelopment analysis; Cross-frontier analysis; Organization; Expense preference hypothesis; Efficient structure hypothesis (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:221:y:2012:i:2:p:454-468

DOI: 10.1016/j.ejor.2012.03.037

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