Changes In The Life Insurance Industry Efficiency Technology And Risk Management

Major challenges for life insurance companies have been posed by an unprecedented wave of mergers and acquisitions in the insurance industry and the emergence of non-traditional competitors such as banks, mutual fund companies and investment advisory firms. This is the first book to analyze the determinants of firm performance in the life insurance industry by identifying the `best practices' employed by leading insurers to succeed in this dynamic business environment. The book draws upon data from insurer financial statements as well as upon an extensive survey of life insurer management practices and strategic choices in distribution systems, information technology, mergers and acquisitions, human resources and financial strategies. Generic strategies such as cost leadership, customer focus, and product differentiation are analyzed as well as strategic practices specific to the insurance industry. Best practices are identified by measuring the economic efficiency of insurers and by comparing firms across the industry. Both cost and revenue efficiency are measured relative to best practice efficient frontiers consisting of the industry's dominant life insurance firms. Economies of scale and the effects of mergers and acquisitions on efficiency are also analyzed. Financial strategies are examined with specific reference to pricing policy, valuation of assets and liabilities, and the current state of firm-level risk management systems. The benchmarks established are the result of extensive fieldwork that identifies key financial risks and methodologies to both measure and manage them at the firm level. The results discussed in the book indicate that firm performance is significantly correlated with management practices and strategic choices. Thus, life insurers can improve profitability by adopting optimal combinations of strategies. The book contains important new material on the effects of strategic choices in product distribution systems, information technology, mergers and acquisitions, human resources, and financial risk management policies. In the area of efficiency, the methodology provides a new approach for identifying peer groups of insurers and measuring the performance of individual insurers relative to their peer group. On the topics of risk and pricing, new insights are offered relative to current methodologies and in regard to areas where improvement is clearly warranted. The book concludes with an analysis of the future opportunities and challenges in the life insurance industry facing managers, and the strategic options available to them to cope with these changes.

Ten chapters explore the determinants of firm performance in the life insurance industry by identifying the best practices employed by leading insurers to succeed in the changing business environment. Particular attention is devoted to strategic choices in distribution systems, information technology, mergers and acquisitions, human resources, and financial strategies. Generic strategies such as cost leadership, customer focus, and product differentiation are analyzed as well as strategic practices specific to the insurance industry. The book concludes with an analysis of the future opportunities and challenges facing managers. Annotation copyrighted by Book News, Inc., Portland, OR

This book traces the development and analyses the performance of life insurance industry in India, since inception of this sector, using different business indicators over the years. It discusses the evolution and changing features of the Indian insurance industry in 3 phases: phase I from 1818 to 1956, phase II from 1956 to 2000 (known as the nationalisation period) and phase III post 2000 (called the post reform period). The book also measures the relative efficiency and productivity of the life insurance industry in India for the post-reform period, by employing Data Envelopment Analysis (DEA). Despite the fact that the life insurance sector recorded a compound annual growth rate (CAGR) of 17% in terms of total premiums and 21% in terms of new business premium collections during the post reform period, the insurers continue to grapple with the issue of profitability. Against this background, the book presents results on the factors determining profitability of the life insurance companies using measures of efficiency and competition. By helping regulatory authorities determine the future course of action in the context of entry of foreign insurers and also in establishing a level playing field, the book has important policy implications.

The Chinese insurance industry has experienced rapid development during the past decade. This original book is the first study in English literature to address the efficiency issue of the Chinese insurance sector, and presents a comprehensive review on alternative methodologies for analyzing firm efficiency. The authors suggest alternative ways to improve performance of insurance companies in China and make useful policy recommendations on regulation, competition and development of the insurance industry. They expand the applications of data envelopment analysis and stochastic frontier analysi.

As risk-taking is an essential part of the banking industry, banks must practise efficient risk management to ensure survival in uncertain financial climates. Banking operations are specifically affected by fluctuations in interest rates which cause financial imbalance; thus banks are now required to put in place an effective management structure that incorporates risk management efficiency measures that help mitigate the wide range of risks they face. In this book, the authors have developed a new modelling approach to determine banks’ financial risk management by offering detailed insights into the integrated approach of dollar-offset ratio and Data Envelopment Analysis (DEA), based on derivatives usage. It further analyses the efficiency measurement under stochastic DEA approaches, namely (i) Bootstrap DEA (BDEA), (ii) Sensitivity Analysis and (iii) Chance-Constrained DEA (CCDEA). As demonstrated in the modelling exercise, this integrated approach can be applied to other cases that require risk management efficiency measurement strategies. Additionally, this is the first book to comprehensively review the derivative markets of both the developed and developing countries in the Asia-Pacific region, by examining the differences of risk management efficiency of the banking institutions in these countries. Based on this measurement approach, strategies are provided for banks to improve their strategic risk management practices, as well as to reduce the impacts from external risks, such as changes in interest rates and exchange rates. Furthermore, this book will help banks to keep abreast of recent developments in the field of efficiency studies in management accounting, specifically in relation to hedge accounting, used by banks in the Asia-Pacific region.

Handbook of International Insurance: Between Global Dynamics and Local Contingencies analyzes key trends in the insurance industry in more than 15 important national insurance markets that represent over 90 percent of world insurance premiums. Well-known academics from Europe, the Americas and Asia examine their own national insurance markets, including the competitive structure, product and service innovations, and regulatory developments. The book provides academics and executives with an unprecedented range of information about today’s insurance markets. This book also provides important 'new' information on the evolution of the financial sector worldwide and comprehensive chapters on reinsurance, Lloyd’s of London, alternative risk transfer, South and East Asian insurance markets, and European insurance markets. Setting the stage is an overview chapter by the editors focusing on overall conclusions on globalization.

This new edition of the Handbook of Insurance reviews the last forty years of research developments in insurance and its related fields. A single reference source for professors, researchers, graduate students, regulators, consultants and practitioners, the book starts with the history and foundations of risk and insurance theory, followed by a review of prevention and precaution, asymmetric information, risk management, insurance pricing, new financial innovations, reinsurance, corporate governance, capital allocation, securitization, systemic risk, insurance regulation, the industrial organization of insurance markets and other insurance market applications. It ends with health insurance, longevity risk, long-term care insurance, life insurance financial products and social insurance. This second version of the Handbook contains 15 new chapters. Each of the 37 chapters has been written by leading authorities in risk and insurance research, all contributions have been peer reviewed, and each chapter can be read independently of the others.

This handbook compiles state-of-the-art empirical studies and applications using Data Envelopment Analysis (DEA). It includes a collection of 18 chapters written by DEA experts. Chapter 1 examines the performance of CEOs of U.S. banks and thrifts. Chapter 2 describes the network operational structure of transportation organizations and the relative network data envelopment analysis model. Chapter 3 demonstrates how to use different types of DEA models to compute total-factor energy efficiency scores with an application to energy efficiency. In chapter 4, the authors explore the impact of incorporating customers' willingness to pay for service quality in benchmarking models on cost efficiency of distribution networks, and chapter 5 provides a brief review of previous applications of DEA to the professional baseball industry, followed by two detailed applications to Major League Baseball. Chapter 6 examines efficiency and productivity of U.S. property-liability (P-L) insurers using DEA, while chapter 7 presents a two-stage network DEA model that decomposes the overall efficiency of a decision-making unit into two components. Chapter 8 presents a review of the literature of DEA models for the perfoemance assessment of mutual funds, and chapter 9 discusses the management strategies formulation of the international tourist hotel industry in Taiwan. Chapter 10 presents a novel use of the two-stage network DEA to evaluate sustainable product design performances. In chapter 11 authors highlight limitations of some DEA environmental efficiency models, and chapter 12 reviews applications of DEA in secondary and tertiary education. Chapter 13 measures the relative performance of New York State school districts in the 2011-2012 academic year. Chapter 14 provides an introductory prelude to chapters 15 and 16, which both provide detailed applications of DEA in marketing. Chapter 17 then shows how to decompose a new total factor productivity index that satisfies all economically-relevant axioms from index theory with an application to U.S. agriculture. Finally, chapter 18 presents a unique study that conducts a DEA research front analysis, applying a network clustering method to group the DEA literature over the period 2000 to 2014.