Evaluating solvency versus efficiency performance and different forms of organization and marketing in US property–liability insurance companies

Evaluating solvency versus efficiency performance and different forms of organization and marketing in US property–liability insurance companies

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Article ID: iaor20051841
Country: Netherlands
Volume: 154
Issue: 2
Start Page Number: 492
End Page Number: 514
Publication Date: Apr 2004
Journal: European Journal of Operational Research
Authors: , , , ,
Keywords: statistics: data envelopment analysis
Abstract:

Solvency is a primary concern for regulators of insurance companies, claims paying ability is a primary concern for policyholders, and return on investment is a primary concern for investors. These interests potentially conflict, and the decision-makers for the firm must trade off one concern versus another. Here we examine the efficiency of insurance companies via data envelopment analysis using solvency, claims paying ability, and return on investment as outputs and using a financial intermediary model for the insurance company. The effect of solvency on efficiency is then examined. These efficiency evaluations are further examined to study stock versus mutual form of organizational structure and agency versus direct marketing arrangements, which are examined separately and in combination.

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