Analysis of insurers’ performance using frontier efficiency and productivity methods: the great contributions by David Cummins and Mary Weiss.

Abstract

This article provides an in-depth analysis of the great contributions by J. David Cummins and Mary A. Weiss to research on insurers' performance using frontier efficiency and productivity methods. Twenty-nine empirical papers are surveyed as well as a book chapter that gives foundations and a guide in using methodology and defining outputs and inputs. Both econometric and non-parametric approaches have been used to estimate frontiers in these analyses, the data envelopment analysis (DEA) being the most frequently used method. A modified version of the value-added approach has normally been used to define outputs and inputs. The majority of their studies focus on the United States, but they have also conducted analyses on other countries (Germany, Italy, and Spain) as well as on intercountry samples (mainly European countries but also Islamic countries). Their empirical papers in this strand of literature have been grouped into 11 different application areas where the main analyzed issues and/or hypotheses tested as well as the principal findings have been discussed. Their contributions to this field have received great attention in literature to the point that the leading paper in almost all of these application areas is one conducted by Cummins and/or Weiss.