Efficiency in the Life Insurance Industry: What are the Efficiency Gains from Bancassurance?

34 Pages Posted: 2 Apr 2010

See all articles by Franco Fiordelisi

Franco Fiordelisi

University of Rome III - Department of Business Studies; Middlesex University - Business School

Ornella Ricci

University of Roma Tre, Department of Business Studies

Date Written: March 1, 2010

Abstract

The aim of this paper is to assess whether bancassurance firms outperform other life insurance companies. Cost and profit efficiency are estimated using a stochastic frontier analysis and including several firm‐specific factors to overcome possible sample heterogeneity. On the cost side, we find strong evidence in favour of bancassurance as a distribution channel. Results on the profit side suggest the need to continuously revise the product mix. Bank ownership is not found to provide any direct advantages. As a consequence, the subjects involved should carefully consider looser forms of cooperation, such as cross‐selling agreements and non‐equity strategic alliances.

Keywords: Bancassurance, Life Insurance, Stochastic Frontier Analysis, Cost Efficiency, Profit Efficiency

JEL Classification: D2, G22, L25

Suggested Citation

Fiordelisi, Franco and Ricci, Ornella, Efficiency in the Life Insurance Industry: What are the Efficiency Gains from Bancassurance? (March 1, 2010). EMFI Working Paper No. 2 - 2010. Available at SSRN: https://ssrn.com/abstract=1578721 or http://dx.doi.org/10.2139/ssrn.1578721

Franco Fiordelisi

University of Rome III - Department of Business Studies ( email )

Via Silvio D'Amico 77
Via Silvio D'Amico 77
Rome, RM 00145
Italy

HOME PAGE: http://host.uniroma3.it/docenti/fiordelisi/?home

Middlesex University - Business School ( email )

The Burroughs
London, NW4 4BT
United Kingdom

Ornella Ricci (Contact Author)

University of Roma Tre, Department of Business Studies ( email )

Via Ostiense, 159
Rome, RM 00145
Italy

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