nep-ias New Economics Papers
on Insurance Economics
Issue of 2008‒01‒19
two papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Performance of the Dutch non-life insurance industry: competition, efficiency and focus By Jacob Bikker; Janko Gorter
  2. What is the impact of duplicate coverage on the demand for health care in Germany? By Vargas, MH; Elhewaihi, M

  1. By: Jacob Bikker; Janko Gorter
    Abstract: This paper investigates competition in the Dutch non-life insurance industry indirectly by measuring scale economies and X-inefficiency, assuming that strong competition would force insurance firms to exploit unused scale economies and to push down inefficiencies. We observe substantial economies of scale (on average 11%) that are larger for smaller firms. Despite considerable consolidation in the industry over the last decade, scale economies have increased, as the optimal scale has outgrown the actual one. Comparing estimates across aggregation levels, we find that scale economies are smaller for groups and lines of business than they are for firms. Besides scale, focus and organizational form are important cost determinants as well: generally, specialized insurers have lower costs and face greater economies of scale. Estimates of thick frontier efficiency point to huge cost differences across firms and within lines of business.Overall, our results suggest that there is a lack of competitive pressure in the Dutch non-life insurance industry.
    Keywords: Non-life insurance; economies of scale; market structure; concentration; competition; X-efficiency; total cost function; aggregation: insurance groups; firms and lines of business;
    JEL: D4 D61 G22 L1
    Date: 2008–01
  2. By: Vargas, MH; Elhewaihi, M
    Abstract: Duplicate coverage involves those individuals who hold public health insurance, and purchase additional private coverage. Using data from the German Institute for Economic Research, we try to investigate the impact of duplicate coverage on the demand for healthcare (measured in number of visits to doctors). Given the simultaneity of the choices to take out additional private health insurance coverage, we estimate a negative binomial model to measure this impact. We also estimate a a Full Information Maximun Loglikelihood (FIML), known as Endogenous Switching Poisson Count Model and we compare these results with the standard maximum log likelihood (ML) estimators of the negative binomial model. The Results show that, there is a positive difference on the level of health services demanded when there is a duplicate coverage. We found also that there is evidence to think that in Germany there is a feedback between duplicate coverage and the demand of health services.
    Keywords: Health care services demand; health insurance
    JEL: I11 I10
    Date: 2007–11–17

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