Efficiency and Scale Economies in the Austrian and German Health Insurance Industry
Journal für Betriebswirtschaft, Nos. 5-6, pp. 282-294, 1996
Posted: 6 Feb 2012 Last revised: 15 Feb 2012
Date Written: 1996
The purpose of this study is to measure efficiency and economies of scale in the Austrian and German health insurance industry. These are important aspects of the competitiveness of the Austrian insurance companies in the light of the liberalization and opening of the insurance markets in the EU. With the aid of the Data Envelopment Analysis I have constructed an effi-ciency frontier to be used as a yardstick of productive efficiency. The sources of data were the annual reports of the years 1991 to 1993. As a result inefficiencies and economies of scale have been found, despite the fact that the most Austrian companies are more efficient than their German competitors. The average cost curve appears to be l-shaped, including a mini-mum efficient scale of about ATS 20 million of premium income. The Austrian companies act in the region of increasing return to scale.
Keywords: insurance, efficiency, economies of scale
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