The Economic Cost Analysis of Life Insurance in Taiwan

• Main Authors: Hsiu- Lien Teng, 鄧秀蓮
• Other Authors: David G. Jou
• Format: Others
• Language: en_US
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/98289904554255138759

碩士 === 國立臺灣大學 === 財務金融學研究所 === 92 === Multi-production economy technology has been established for analysis of the cost efficiency of various industries. By using the input unit price and output quantity as endogenous variables, the transcendent logarithm cost function is utilized in this study to estimate the cost characteristics of life insurance in Taiwan. Using the economic efficiency benchmarks, the existence of economy of scale can be examined and further investigated. Considering cost structure features such as organization and distribution, the reduced form cost function and the indicators of economic efficiency were derived. The existence of global ray scale economies, product specific scale economies and pair-wise cost complementary can imply the cost comparative advantage product for different organizations and distribution formats. Pursuing the optimal cost saving combination and product mix is the goal of this study. As the empirical result exhibited, there are global ray scale economies of life insurance in Taiwan. The domestic firm showed a higher increase in return to scale than was observed in foreign insurers. Furthermore, it is suggested that domestic insurers have control over the individual life while foreign insurers control the individual accidents and health life insurance.. The existence of the scope of the economy in each sub-sample also indicated the optimal product composition under the consideration of organization and distribution. This paper is organized as follows. In the first section, the research background and motivation in the introduction is described. In section two, the literature about economic efficiency of life insurance industry is reviewed, and in the third section, the fundamental theory of multi-production and measurement of economic efficiency will be discussed. Model specification and data description are expressed in section four, and the empirical result and conclusion are discussed in sections five and six, respectively.