The Determinants of Efficiency and Productivity in the Swiss Insurance Industry

University of St. Gallen, School of Finance Research Paper No. 2015/02

European Journal of Operational Research, Vol. 248, No. 2, 2016

41 Pages Posted: 12 Mar 2015 Last revised: 19 Jan 2016

See all articles by Christian Biener

Christian Biener

Institute of Insurance Economics, University of St. Gallen; University of St. Gallen - School of Finance

Martin Eling

University of St. Gallen - Institute of Insurance Economics; University of Saint Gallen - School of Finance (SoF)

Jan Hendrik Wirfs

University of St. Gallen - School of Finance

Date Written: January 12, 2015

Abstract

Using state-of-the-art frontier efficiency methodologies, we study the efficiency and productivity of Swiss insurance companies in the life, property/casualty, and reinsurance sectors from 1997–2013. The broad scope of this study provides an opportunity to compare and cross-check the findings from other countries, across different time periods, and across different subsectors. Moreover, we are the first to analyze the internationalization strategies of insurance companies, a topic of high interest in the business and economics literature, but one that has not to date been the focus of efficiency studies in the insurance sector. We find that productivity and efficiency in the Swiss insurance market have improved for the property/casualty and reinsurer sectors, but not in the case of life insurance. The results suggest that the internationalization of the insurance business has a positive impact on insurer efficiency. We also illustrate the importance of analyzing nonlinear and interaction effects in second-stage regressions so as to obtain richer insight into the determinants of efficiency. These tests show that being either a small specialist or a large diversified company is optimal from an efficiency point of view. Our findings are of interest not only for Swiss insurance company managers, regulators, and policymakers, but also for academics in other fields and practitioners in other countries.

Keywords: Data envelopment analysis, Two-stage double-bootstrap, Internationalization, OR in in-surance

Suggested Citation

Biener, Christian and Eling, Martin and Wirfs, Jan Hendrik, The Determinants of Efficiency and Productivity in the Swiss Insurance Industry (January 12, 2015). University of St. Gallen, School of Finance Research Paper No. 2015/02. Available at SSRN: https://ssrn.com/abstract=2577301 or http://dx.doi.org/10.2139/ssrn.2577301

Christian Biener

Institute of Insurance Economics, University of St. Gallen ( email )

Girtannerstrasse 6
St. Gallen, St. Gallen 9010
Switzerland

HOME PAGE: http://sites.google.com/site/bienerresearchprofile/

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Martin Eling (Contact Author)

University of St. Gallen - Institute of Insurance Economics ( email )

Kirchlistrasse 2
St. Gallen, 9010
Switzerland

University of Saint Gallen - School of Finance (SoF) ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Jan Hendrik Wirfs

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Register to save articles to
your library

Register

Paper statistics

Downloads
122
Abstract Views
1,772
rank
227,403
PlumX Metrics