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Technology investment and insurer efficiency

Author

Listed:
  • Faith Roberts Neale

    (University of North Carolina at Charlotte)

  • Pamela Peterson Drake

    (James Madison University)

  • Licheng Jin

    (Southwestern University of Finance and Economics)

  • Gene Lai

    (University of North Carolina at Charlotte
    University of North Carolina at Charlotte)

Abstract

We examine the role of technology expense and asset data items with insurer efficiency. We show that insurers increasing investment in technology classified as expenses, experience increases in allocative efficiency the following year. Insurers that increase expenditures classified as technology assets realize decreases in cost and allocative efficiency the next year. In addition, we find that expensed technology contains different information than those classified as assets with the association of expenditures in assets with efficiency dominating expensed technology. Our findings support that expensed technology items are for innovative applications and technology assets are used to support general business operations. We also explore the possibility that the reduction of commissions to agents is a mediator through which technology expenses affect efficiency, but do not find support for this mediation.

Suggested Citation

  • Faith Roberts Neale & Pamela Peterson Drake & Licheng Jin & Gene Lai, 2025. "Technology investment and insurer efficiency," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 50(1), pages 8-33, January.
    • Handle: RePEc:pal:gpprii:v:50:y:2025:i:1:d:10.1057_s41288-024-00327-y
    DOI: 10.1057/s41288-024-00327-y
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