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Cost Efficiency In Australian General Insurers: A Non-Parametric Approach

Worthington, Andrew C. & Hurley, Emily V. (2002) Cost Efficiency In Australian General Insurers: A Non-Parametric Approach. British Accounting Review, 34(1), pp. 89-108.

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Abstract

Data envelopment analysis is used to calculate pure technical, scale, allocative and cost efficiency indices for a sample of forty-six Australian general insurers. The inputs used are labour, physical capital (in the form of both information technology and plant and equipment) and financial capital. The outputs are net premium revenues for housing-related, transport-related, indemnity-related, mortgage-related and other insurance, along with invested assets. The results indicate that the major source of overall cost inefficiency would appear to be allocative inefficiency, rather than technical inefficiency, and that the largest twenty percent of insurers are significantly more efficient than the remaining firms. A second-stage analysis uses limited dependent variable regression techniques to relate efficiency scores to firm-specific information. Cost efficiency appears to be closely related to asset size but not to stock exchange listing or product diversification or specialisation.

Impact and interest:

7 citations in Scopus
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ID Code: 2565
Item Type: Journal Article
Keywords: Data envelopment analysis, technical and scale efficiency, general insurance
DOI: 10.1006/bare.2002.0185
ISSN: 0890-8389
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BANKING FINANCE AND INVESTMENT (150200) > Financial Institutions (incl. Banking) (150203)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 2002 Elsevier
Copyright Statement: Reproduced in accordance with the copyright policy of the publisher.
Deposited On: 23 Nov 2005
Last Modified: 05 Jan 2011 23:25

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