Efficiency in the Life Insurance Industry: What are the Efficiency Gains from Bancassurance?
34 Pages Posted: 2 Apr 2010
Date Written: March 1, 2010
Abstract
The aim of this paper is to assess whether bancassurance firms outperform other life insurance companies. Cost and profit efficiency are estimated using a stochastic frontier analysis and including several firm‐specific factors to overcome possible sample heterogeneity. On the cost side, we find strong evidence in favour of bancassurance as a distribution channel. Results on the profit side suggest the need to continuously revise the product mix. Bank ownership is not found to provide any direct advantages. As a consequence, the subjects involved should carefully consider looser forms of cooperation, such as cross‐selling agreements and non‐equity strategic alliances.
Keywords: Bancassurance, Life Insurance, Stochastic Frontier Analysis, Cost Efficiency, Profit Efficiency
JEL Classification: D2, G22, L25
Suggested Citation: Suggested Citation
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