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Scale Economies and Performance in the French Insurance Industry

Author

Listed:
  • F Fecher
  • S Perelman
  • P Pestieau

    (Department of Economics, University of Liège)

Abstract

The purpose of this paper is to provide for both life and non life insurance a measurement of economies of scale and an assessment of productive performance of French companies. We use a translog cost function to check the presence of scale economies and a parametric approach to construct our yardstick of productive efficiency. Our panel data covers 84 life and 243 non life companies for the period 1984–89. The main findings indicate both the existence of increasing returns to scale and a wide dispersion in the rates of inefficiency across companies. Those two results are shown to be closely linked to a number of characteristics of the companies studied, particularly their institutional form.

Suggested Citation

  • F Fecher & S Perelman & P Pestieau, 1991. "Scale Economies and Performance in the French Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 16(3), pages 315-326, July.
    • Handle: RePEc:pal:gpprii:v:16:y:1991:i:3:p:315-326
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    Citations

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    Cited by:

    1. J.A. Bikker & J. Gorter, 2008. "Performance of the Dutch non-life insurance industry: competition, efficiency and focus," Working Papers 08-01, Utrecht School of Economics.
    2. Henri Loubergé, 1998. "Risk and Insurance Economics 25 Years After," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 23(4), pages 540-567, October.
    3. Jacob A. Bikker, 2017. "Performance of the life insurance industry under pressure: efficiency, competition and consolidation," Chapters, in: Jacob A. Bikker & Laura Spierdijk (ed.), Handbook of Competition in Banking and Finance, chapter 9, pages 152-182, Edward Elgar Publishing.
    4. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
    5. 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.
    6. Augusto Felício, J. & Rodrigues, Ricardo, 2015. "Organizational factors and customers' motivation effect on insurance companies' performance," Journal of Business Research, Elsevier, vol. 68(7), pages 1622-1629.
    7. Dimitrios G. Giantsios & Athanasios G. Noulas, 2020. "Cost Efficiency and Convergence in the European Nonlife Insurance Industry," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(6), pages 1-6.
    8. Jacob A. Bikker, 2017. "Performance of the life insurance industry under pressure: efficiency, competition and consolidation," Chapters, in: Jacob A. Bikker & Laura Spierdijk (ed.), Handbook of Competition in Banking and Finance, chapter 9, pages 152-182, Edward Elgar Publishing.
    9. Hanweck, Gerald A. & Hogan, Arthur M. B., 1996. "The structure of the property/casualty insurance industry," Journal of Economics and Business, Elsevier, vol. 48(2), pages 141-155, May.
    10. Milton Nektarios, 2010. "A Growth Theory for the Insurance Industry," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 13(1), pages 45-60, March.
    11. G. Russo & W.H.J. Hassink, 2005. "The Part-Time Wage Penalty: a Career Perspective," Working Papers 01-01, Utrecht School of Economics.
    12. Michiel Bijlsma & Machiel van Dijk & Marc Pomp & Cora Zonderland, 2005. "Competition in markets for life insurance," CPB Document 96.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Michiel Bijlsma & Cora Zonderland & Machiel van Dijk & Marc Pomp, 2005. "Competition in markets for life insurance," CPB Document 96, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Michiel van Leuvensteijn & J.A. Bikker, 2005. "An exploration into competition and efficiency in the Dutch life insurance industry," CPB Discussion Paper 48, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Jacob A. Bikker, 2017. "Competition and Scale Economy Effects of the Dutch 2006 Health-Care Insurance Reform," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(1), pages 53-78, January.
    16. Jaap Bikker & Adelina Popescu, 2014. "Efficiency and competition in the Dutch non-life insurance industry: Effects of the 2006 health care reform," Working Papers 14-12, Utrecht School of Economics.
    17. Michiel van Leuvensteijn & J.A. Bikker, 2005. "An exploration into competition and efficiency in the Dutch life insurance industry," CPB Discussion Paper 48, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Jaap Bikker & Adelina Popescu, 2014. "Efficiency and competition in the Dutch non-life insurance industry: Effects of the 2006 health care reform," Working Papers 14-12, Utrecht School of Economics.

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