DOES OWNERSHIP STRUCTURE MATTER? A COST EFFICIENCY STUDY OF LIFE INSURANCE FIRMS IN INDONESIA

  • Riski Wicaksono Universitas Sebelas Maret
  • Dr. Tri Mulyaningsih UniversitasSebelasMaret
Keywords: Insurance industry, Efficiency, Stochastic Frontier Analysis, Time Varying Model

Abstract

This paper is about the cost and profit efficiency of Indonesia’s life insurance industry. Using data from 2010–2014, we compare cost and profit efficiency among local and joint venture insurers. Our empirical analysis, based on a time-invariant translog cost model, reveals mean cost allocation and profit efficiency scores of 0.36 and 0.52, respectively. Interestingly, we find that domestic insurers are more cost efficient compared to joint venture insurers; however, joint venture insurers maximize profit more.

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Published
2019-10-15
Section
Articles