Using a unique data-set, we examined how different business strategies used by insurance intermediaries in Taiwan affect their efficiency and productivity. Previous work in this area has focused on the efficiency and productivity of insurance companies using different distribution channels or selling different product lines. Our primary emphasis was on the efficiency and productivity of insurance intermediaries. We found that diversified insurance intermediaries achieve more efficiency gains in cost-efficiency and revenue efficiency than focused insurance intermediaries do. The cost-efficiency benefits of diversified intermediaries are due to technical efficiency. Our regression analysis further indicates that insurance intermediaries’ efficiency benefits are associated with their size, insurer partners, financial leverage, net income, product mix and market share. Overall, our results indicate that there are cost and revenue economies of scope in the insurance intermediary industry.
The Geneva Papers on Risk and Insurance - Issues and Practice, Volume 42, Issue 3, pp 530–555