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Frontier Efficiency Methodologies to Measure Performance in the Insurance Industry: Overview, Systematization, and Recent Developments

Author

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  • Martin Eling

    (Institute of Insurance Science, Ulm University, Helmholtzstraße 22, 89069 Ulm, Germany)

  • Michael Luhnen

    (Institute of Insurance Economics, University of St. Gallen, Kirchlistrasse 2, 9010 St. Gallen, Switzerland)

Abstract

The purpose of this paper is to provide an overview on frontier efficiency measurement in the insurance industry, a topic of great interest in the academic literature during the last several years. We provide a comprehensive survey of 95 studies with a special emphasis on innovations and recent developments. We review different econometric and mathematical programming approaches to efficiency measurement in insurance and discuss the choice of input and output factors. Furthermore, we categorise the 95 studies into 10 different areas of application and discuss selected results. While there is a broad consensus with regard to the choice of methodology and input factors, our review reveals large differences in output measurement. Significant need for future research can be identified, for example, with regard to analysis of organisational forms, market structure and risk management, especially in the international context.

Suggested Citation

  • Martin Eling & Michael Luhnen, 2010. "Frontier Efficiency Methodologies to Measure Performance in the Insurance Industry: Overview, Systematization, and Recent Developments," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 35(2), pages 217-265, April.
  • Handle: RePEc:pal:gpprii:v:35:y:2010:i:2:p:217-265
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    Citations

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    Cited by:

    1. Wanke, Peter & Barros, Carlos Pestana, 2016. "Efficiency drivers in Brazilian insurance: A two-stage DEA meta frontier-data mining approach," Economic Modelling, Elsevier, vol. 53(C), pages 8-22.
    2. Biener, Christian & Eling, Martin & Jia, Ruo, 2017. "The structure of the global reinsurance market: An analysis of efficiency, scale, and scope," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 213-229.
    3. Norashikin Ismail & Prof. Dr. Datuk Syed Othman Alhabshi & Prof. Obiyathulla Bacha, 2011. "Organizational Form And Efficiency: The Coexistence Of Family Takaful And Life Insurance In Malaysia," Journal of Global Business and Economics, Global Research Agency, vol. 3(1), pages 122-137, July.
    4. Hela Miniaoui & Anissa Chaibi, 2014. "Technical Efficiency of Takaful Industry: A Comparative Study of Malaysia and GCC Countries," Working Papers 2014-55, Department of Research, Ipag Business School.
    5. Huang, Wei & Eling, Martin, 2013. "An efficiency comparison of the non-life insurance industry in the BRIC countries," European Journal of Operational Research, Elsevier, vol. 226(3), pages 577-591.
    6. Jacob A. Bikker, 2016. "Performance of the Life Insurance Industry Under Pressure: Efficiency, Competition, and Consolidation," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 19(1), pages 73-104, March.
    7. repec:ipg:wpaper:2014-055 is not listed on IDEAS
    8. Biener, Christian & Eling, Martin & Wirfs, Jan Hendrik, 2016. "The determinants of efficiency and productivity in the Swiss insurance industry," European Journal of Operational Research, Elsevier, vol. 248(2), pages 703-714.
    9. Milton Nektarios & Panos Xenos & George Nektarios & Kostas Poulakis & Michalis Chouzouris, 2015. "Efficiency Analysis of Lloyd’s Syndicates: A Comparison of DEA and SFA Approaches," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(1-2), pages 27-46, January-M.
    10. Gustavo Ferro & Carlos A. Romero, 2011. "Comparación de medidas de cambio de productividad. Las aproximaciones de Malmquist y Luenberger en una aplicación al mercado de seguros," Working Papers hal-00597946, HAL.
    11. Biener, Christian & Eling, Martin, 2012. "Organization and efficiency in the international insurance industry: A cross-frontier analysis," European Journal of Operational Research, Elsevier, vol. 221(2), pages 454-468.
    12. Schaper, Philipp, 2017. "Under pressure: how the business environment affects productivity and efficiency of European life insurance companiesAuthor-Name: Eling, Martin," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1082-1094.

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