Measuring Efficiency in the Life Insurance Industry with a Stochastic Frontier Model

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Carlos Pestana Barros~Nazaré Barroso~Maria Rosa Borges, Portugal
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Summary:
This paper analyses the rate of technical efficiency in the Portuguese Life insurance sector between 1995 and 2003, by means of a stochastic cost frontier method. A Cobb-Douglas frontier model is used and the maximum likelihood estimation technique is employed to estimate the empirical model. We estimate the efficiency scores and rank all of the companies according to their efficiency scores. Economic implications of the study are derived.
 
Date: 1 June - Time: 14:15 to 15:45 - Room: 343
Theme: 1.A. Stochastic dependence