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. In this context, we provide the first empirical analysis of internationalization strategies of insurance companies, a topic of high interest in the business and economics literature, but one that has to date not been the focus of efficiency studies in the insurance sector. We find that productivity and efficiency have improved with regard to property/casualty and reinsurance. In the case of life insurance, productivity and efficiency diminished; however, life insurance firms with higher levels of international business exhibit superior efficiency levels. We observe that diversification strategies directed to the European market are more beneficial compared to those targeting markets outside of Europe.
Regulation of any market can either promote or impede its development, thus affecting social welfare. In this paper, we are concerned with the impact of regulation in microinsurance markets. We evaluate existing and potential regulatory mechanisms with regard to its underlying economic rationale, and offer recommendations intended to enhance support and minimize barriers for microinsurance market development. Specifically, we recommend avoiding incentives for regulatory arbitrage; responding to the characteristics of the microinsurance market, including licensing, capital, reinsurance, and distribution systems; enhancing the market through financial literacy initiatives; and providing support in the form of data collection and management training.
This article reports the main results of the 2013 Risk Premium Project update, a yearly review of actuarial and finance literature on the theory and empirics of risk assessment for property-casualty insurance. The literature review reveals a broad variety of topics, with a strong leaning toward catastrophe risk, market efficiency, and new valuation techniques. Within the field of catastrophe risk, the role of weather and climate-related risks for the insurance sector is reviewed and both the threats and the opportunities arising from the changing risk landscape are discussed.
Cyber Risk stellt eines der grossen neuen Risiken des 21. Jahrhunderts dar. Wir analysieren das Management dieser neuen Risikoart und nehmen eine Einschätzung zur Versicherbarkeit vor. Zu diesem Zweck begutachten wir die bestehende Literatur und nehmen Befragungen unter Kunden und Anbietern von Cyber-Versicherungen vor. Unsere Ergebnisse zeigen, dass ein effizientes Risikomanagement die Wahrscheinlichkeit und das Ausmass eines Cyber-Risk-Schadens erheblich senken kann. Cyber-Versicherungen bieten in diesem Kontext eine gute Möglichkeit, Risiken zu transferieren und können so zu einem effizienten Risikomanagement beitragen. Die Marktbefragung unter Kunden und Anbietern der Cyber-Versicherung unterstreicht die zunehmende Bedeutung von Cyber Risk, aber auch eine gewisse Skepsis vor entsprechenden Versicherungslösungen. Wir zeigen auf, welche Faktoren die Entwicklung dieses Marktes derzeit noch behindern und unter welchen Bedingungen eine Marktentwicklung möglich erscheint. Unserer Prognose nach entsteht mit der Cyber-Versicherung derzeit ein grosser neuer Versicherungsmarkt, der in den kommenden Jahren enorm an Bedeutung gewinnen wird.
A central matter of dispute in the internationalization literature is the existence and shape of a systematic relationship between the degree of internationalization and firm performance (I-P relationship). Considering the global insurance industry, we show that the I-P relationship depends on the industry's idiosyncrasies and on the geographical scope of internationalization. The life insurance industry's idiosyncrasies lead to relatively high liability of foreignness that compromise cost efficiency, and relatively low risk reduction benefits of globalization. Therefore, we observe an overall negative impact of globalization on life insurers' performance. However, the nonlife insurance industry's idiosyncrasies render this relationship insignificant.
This article reports the main results of the 2012 Risk Premium Project update, a yearly review of actuarial and finance literature on the theory and empirics of risk assessment for property-casualty insurance. Pricing and modeling insurance risks and methodological advancement in risk valuation were popular fields of research in 2012. Of special note is new work on behavioral pricing and liquidity. Additionally, underwriting cycles attracted some controversy, and emerging risks, such as systemic risk and potential interrelations between insurance and other financial markets, were also areas of intense discussion.
The purpose of this research is to measure the performance of microinsurance programs using data envelopment analysis and to derive implications for the viable provision of microinsurance products. This is a worthwhile exercise given the significant limitations of the existing performance measures used in the microinsurance industry. A single and simple to interpret performance measure can overcome these limitations and provide a sophisticated tool for performance measurement within a multidimensional framework. Moreover, this technique can incorporate the important social function that microinsurers fulfill and provide powerful managerial implications. We illustrate the capabilities of data envelopment analysis using a sample of 20 microinsurance programs and recent innovations from the efficiency literature, such as the bootstrapping of efficiency scores and a truncated regression analysis of efficiency determinants.
This paper employs cross-frontier analysis, an innovative tool based on data envelopment analysis, to provide new insight into the relationship between organization and efficiency in international insurance markets. We are the first to empirically test the expense preference hypothesis and the efficient structure hypothesis in a large cross-country study. For this purpose, we consider 23,807 firm years for 21 countries from northern America and the European Union-a dataset not previously analyzed in this context. We find evidence for the efficient structure hypothesis in selected market segments, but we find no evidence for the expense preference hypothesis. Our results provide insight into the competitiveness of stock and mutual insurers from different countries. At the country level, the results can be used to compare different insurance markets. Our findings are especially interesting for the strategic management of insurance companies as well as for regulators and boards of national insurance associations.
