Integration and Efficiency Convergence in European Life Insurance Markets

50 Pages Posted: 11 May 2017

See all articles by J David Cummins

J David Cummins

Temple University - Risk Management & Insurance & Actuarial Science

María Rubio-Misas

University of Malaga - Finance & Accounting

Date Written: June 15, 2016

Abstract

This study examines the impact of integration on the efficiency of European Union (EU) life insurance markets for the post deregulation period 1998-2007. To assess the effects of deregulation, we first estimate cost and revenue efficiencies by applying the metafrontier data envelopment analysis (DEA) approach, which facilitates efficiency comparisons across countries. In the second stage, we test the degree of inter-country convergence as well as cross sectional dispersion by using panel data models. Our findings show that efficiencies have converged and that the dispersion of mean efficiency scores across countries has been reduced, providing evidence of integration in the EU life insurance market. Results also show the β-convergence and σ-convergence in metatechnology efficiency ratios suggesting that technological discrepancy among the life insurance markets of major EU countries has decreased. We also find that financial market development, legal and governmental systems, as well as competitive intensity affect insurance market performance and integration.

Keywords: European Life Insurance Markets, Convergence, Metafrontiers, Cost and Revenue Efficiency, Environmental Factors

JEL Classification: G22, D24, F36

Suggested Citation

Cummins, J. David and Rubio-Misas, María, Integration and Efficiency Convergence in European Life Insurance Markets (June 15, 2016). Available at SSRN: https://ssrn.com/abstract=2965742 or http://dx.doi.org/10.2139/ssrn.2965742

J. David Cummins

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)

María Rubio-Misas (Contact Author)

University of Malaga - Finance & Accounting ( email )

Spain
+34 952131236 (Phone)

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