Analyzing Firm Performance in the Insurance Industry Using Frontier Efficiency and Productivity Methods

74 Pages Posted: 3 Feb 2012

See all articles by J David Cummins

J David Cummins

Temple University - Risk Management & Insurance & Actuarial Science

Mary A. Weiss

Temple University

Date Written: December 2, 2011

Abstract

The objective of this paper is to discuss the use of modern frontier efficiency analysis to analyze firm performance in the insurance industry. The objective is to provide the foundations for insurance economists to use in adapting their research to incorporate the frontier efficiency approach. The chapter also serves as a guide for those who are already conducting frontier efficiency analysis but are seeking guidance in using the methodology or defining inputs and outputs. We describe and analyze the principal methodologies that have been developed for measuring efficiency and productivity, defining the input and output concepts required to apply the methodologies to insurers. We also survey the empirical literature on efficiency and productivity measurement in insurance.

Keywords: Insurance, insurance firms, efficiency, productivity, data envelopment analysis, stochastic frontier analysis

JEL Classification: D24, L22, G20, G21, G22

Suggested Citation

Cummins, J. David and Weiss, Mary A., Analyzing Firm Performance in the Insurance Industry Using Frontier Efficiency and Productivity Methods (December 2, 2011). Available at SSRN: https://ssrn.com/abstract=1997468 or http://dx.doi.org/10.2139/ssrn.1997468

J. David Cummins (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1801 Liacouras Walk.
Philadelphia, PA 19122
United States
215-204-8468 (Phone)
215-204-4712 (Fax)

Mary A. Weiss

Temple University ( email )

Fox School of Business and Management
1801 Liacouras Walk
Philadelphia, PA 19122
United States
215-204-1916 (Phone)

HOME PAGE: http://www.sbm.temple.edu/~rmidept/weiss.html

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