Innovations in Financial Markets and Institutions

Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management

Editors: Cummins, David, Santomero, Anthony (Eds.)

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About this book

Major challenges for life insurance companies have been posed by an unprecedented wave of mergers and acquisitions in the insurance industry and the emergence of non-traditional competitors such as banks, mutual fund companies and investment advisory firms. This is the first book to analyze the determinants of firm performance in the life insurance industry by identifying the `best practices' employed by leading insurers to succeed in this dynamic business environment. The book draws upon data from insurer financial statements as well as upon an extensive survey of life insurer management practices and strategic choices in distribution systems, information technology, mergers and acquisitions, human resources and financial strategies. Generic strategies such as cost leadership, customer focus, and product differentiation are analyzed as well as strategic practices specific to the insurance industry. Best practices are identified by measuring the economic efficiency of insurers and by comparing firms across the industry. Both cost and revenue efficiency are measured relative to best practice efficient frontiers consisting of the industry's dominant life insurance firms. Economies of scale and the effects of mergers and acquisitions on efficiency are also analyzed. Financial strategies are examined with specific reference to pricing policy, valuation of assets and liabilities, and the current state of firm-level risk management systems. The benchmarks established are the result of extensive fieldwork that identifies key financial risks and methodologies to both measure and manage them at the firm level.
The results discussed in the book indicate that firm performance is significantly correlated with management practices and strategic choices. Thus, life insurers can improve profitability by adopting optimal combinations of strategies. The book contains important new material on the effects of strategic choices in product distribution systems, information technology, mergers and acquisitions, human resources, and financial risk management policies. In the area of efficiency, the methodology provides a new approach for identifying peer groups of insurers and measuring the performance of individual insurers relative to their peer group. On the topics of risk and pricing, new insights are offered relative to current methodologies and in regard to areas where improvement is clearly warranted. The book concludes with an analysis of the future opportunities and challenges in the life insurance industry facing managers, and the strategic options available to them to cope with these changes.

Table of contents (10 chapters)

  • Life Insurance: The State of the Industry

    Santomero, Anthony M.

    Pages 1-18

  • The Industry Speaks: Results of the WFIC Insurance Survey

    Moore, James F. (et al.)

    Pages 19-74

  • Efficiency in the U.S. Life Insurance Industry: Are Insurers Minimizing Costs and Maximizing Revenues?

    Cummins, J. David

    Pages 75-115

  • Efficiency and Competitiveness in the U.S. Life Insurance Industry: Corporate, Product, and Distribution Strategies

    Carr, Roderick M. (et al.)

    Pages 117-157

  • Life Insurance Mergers and Acquisitions

    Cummins, J. David (et al.)

    Pages 159-185

Buy this book

eBook $189.00
price for USA (gross)
  • ISBN 978-1-4615-5045-7
  • Digitally watermarked, DRM-free
  • Included format: PDF
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover $239.00
price for USA
  • ISBN 978-0-7923-8535-6
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
Softcover $239.00
price for USA
  • ISBN 978-1-4613-7293-6
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
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Bibliographic Information

Bibliographic Information
Book Title
Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management
Editors
  • David Cummins
  • Anthony Santomero
Series Title
Innovations in Financial Markets and Institutions
Series Volume
11
Copyright
1999
Publisher
Springer US
Copyright Holder
Springer Science+Business Media New York
eBook ISBN
978-1-4615-5045-7
DOI
10.1007/978-1-4615-5045-7
Hardcover ISBN
978-0-7923-8535-6
Softcover ISBN
978-1-4613-7293-6
Edition Number
1
Number of Pages
XIII, 369
Topics