Efficiency and Productivity in the US Property-Liability Insurance Industry: Ownership Structure, Product and Distribution Strategies

71 Pages Posted: 23 Sep 2016

See all articles by J David Cummins

J David Cummins

Temple University - Risk Management & Insurance & Actuarial Science

Xiaoying Xie

California State University, Fullerton

Date Written: November 21, 2013

Abstract

The paper examines efficiency and productivity of US property-liability (P-L) insurers using data envelopment analysis (DEA). We estimate pure technical, scale, cost, revenue and profit efficiency over the period 1993-2011. Insurers’ adjacent year total factor productivity changes and their contributing factors are also investigated. In particular, we explore the relationship of insurers’ efficiency with their ownership structure, product and distribution strategies. Regression analyses are also performed to explore the relationships between firm characteristics, efficiency and productivity. The results indicate US P-L insurance industry has improved its efficiency and productivity over time. Insurers’ product strategy, distribution system, and diversification strategy are important determinants of insurers’ efficiency and productivity, along with other firm characteristics.

Keywords: property-liability insurance, productivity, data envelopment analysis (DEA), Malmquist index, mutual insurers, distribution systems, diversification

JEL Classification: G20,G22

Suggested Citation

Cummins, J. David and Xie, Xiaoying, Efficiency and Productivity in the US Property-Liability Insurance Industry: Ownership Structure, Product and Distribution Strategies (November 21, 2013). Available at SSRN: https://ssrn.com/abstract=2841836 or http://dx.doi.org/10.2139/ssrn.2841836

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)

Xiaoying Xie

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92831
United States

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