Roorkee: Centre for Environment, Social and Economic Research Publications
Market power and efficiency both contribute to the viability of the insurer, making them essential to the management of life insurance companies. This study measured efficiency using the stochastic frontier approach based on the translog cost function. We then investigated the correlation between efficiency and market power using generalized extreme value analysis.The results show a strong nonlinear, asymmetric dependence between the efficiency and market power of leading Taiwanese insurers. In other words, companies with greater market power do not necessarily exhibit greater efficiency. This study provides a reference to aid life insurance companies in the formulation of operational strategies.
International Journal of Applied Mathematics and Statistics 52(8), p.144-151