Milton Nektarios

Efficiency in the Greek insurance industry

This paper employs the two-stage procedure of Simar and Wilson (2007) to analyse the effects of deregulation on the efficiency of the Greek insurance industry. The efficiency is estimated by means of data envelopment analysis (DEA). The companies are ranked according to their CRS efficiency score for the period 1994-2003. The first stage results indicate a decline in efficiency over the sample period, while the second stage results confirm that the competition for market shares is a major driver of efficiency in the Greek insurance industry.

A Growth Theory for the Insurance Industry

Insurance economics models of statics and comparative statics assume that the process of economic adjustment must inevitably lead to equilibrium. The question of attainability of equilibrium has not been addressed so far. This is the domain of dynamic analysis. In this article, we develop a model of economic growth for the insurance industry. The production function of the insurance industry is based on the assumption that the output, “incurred losses,” is a function of “invested assets” and “other labor and nonlabor inputs.” The latter grow at the rate n, a proxy of the growth rate of insurance expenses. The assets–inputs ratio, r, characterizes the steady‐state growth path that the insurance industry eventually attains. The adjustment process takes place through the assets–losses ratio, v, which is affected by the insurance leverage, the loss ratio, and the insurance exposure of the insurance industry. An insurance industry that has reached a steady state will have its output growing at the rate n +π, where π is the growth rate of average productivity. The incremental reserve ratio, s, determines definitely a steady‐state growth path for the insurance industry. An increase or decrease in s may move the insurance industry to a higher or lower growth path. We suggest that this analysis provides a stronger theoretical context for analyzing dynamic phenomena in the insurance industry.

A Catastrophe Insurance System for the European Union

This paper proposes an integrated risk management plan for catastrophe risks in the European Union, consisting of three layers. The private markets would have the first layer of responsibility, while the National Catastrophe Insurance Organizations would represent the second layer. This layer would in turn be supported by the European Group of National Catastrophe Organizations (EUROCAT), a new organization operating under the auspices of the European Commission. An approach that utilizes a pan-European reinsurance program is proven to be the most efficient solution for minimizing the total cost of catastrophe risks in the European Union. EUROCAT would be a reinsurer of last resort and provide reinsurance to qualified state or regional catastrophe insurance funds. Member-state funds would be required to adopt adequate disaster response and management mechanisms and enforce reasonable building code, land use, and mitigation efforts to minimize the amount of insured losses. As the reinsurance premiums charged by EUROCAT would be risk-based, the pricing mechanism would be used to encourage active development and enforcement of these standards.

Efficiency and productivity assessment of public hospitals in Greece during the crisis period 2009–2012

BackgroundThis study is an initial effort to examine the dynamics of efficiency and productivity in Greek public hospitals during the first phase of the crisis 2009–2012. Data were collected by the Ministry of Health after several quality controls ensuring comparability and validity of hospital inputs and outputs. Productivity is estimated using the Malmquist Indicator, decomposing the estimated values into efficiency and technological change.MethodsHospital efficiency and productivity growth are calculated by bootstrapping the non-parametric Malmquist analysis. The advantage of this method is the estimation efficiency and productivity through the corresponding confidence intervals. Additionally, a Random-effects Tobit model is explored to investigate the impact of contextual factors on the magnitude of efficiency.ResultsFindings reveal substantial variations in hospital productivity over the period from 2009 to 2012. The economic crisis of 2009 had a negative impact in productivity. The average Malmquist Productivity Indicator (MPI) score is 0.72 with unity signifying stable production. Approximately 91% of the hospitals score lower than unity. Substantial increase is observed between 2010 and 2011, as indicated by the average MPI score which fluctuates to 1.52. Moreover, technology change scored more than unity in more than 75% of hospitals. The last period (2011–2012) has shown stabilization in the expansionary process of productivity. The main factors contributing to overall productivity gains are increases in occupancy rates, type and size of the hospital.ConclusionsThis paper attempts to offer insights in efficiency and productivity growth for public hospitals in Greece. The results suggest that the average hospital experienced substantial productivity growth between 2009 and 2012 as indicated by variations in MPI. Almost all of the productivity increase was due to technology change which could be explained by the concurrent managerial and financing healthcare reforms. Hospitals operating under decreasing returns to scale could achieve higher efficiency rates by reducing their capacity. However, certain social objectives should also be considered. Emphasis perhaps should be placed in utilizing and advancing managerial and organizational reforms, so that the benefits of technological improvements will have a continuing positive impact in the future.

Earthquake insurance for Greece: comparative analysis and pricing issues

Purpose - The present article serves two main goals. First, the proposed scheme for Greece is being involved in a benchmarking analysis. Second, an expansion of previous quantitative models is undertaken in order to estimate risk-based premiums for the proposed national insurance scheme. Design/methodology/approach - The benchmarking analysis of the proposed scheme is undertaken in comparison to the best practices of the catastrophe insurance systems operating in most member-states of the EU. Risk modelling is employed to calculate risk-based premiums. Findings - The benchmarking analysis leads to conclusions which may be useful for the stage of actual implementation of such a program in Greece. Risk-based premiums for the proposed national insurance scheme are estimated for all CRESTA zones of the country. Research limitations/implications - Uncertainty of estimated catastrophe losses is a limitation of the research. Practical implications - The paper provides a detailed description of the proposed earthquake insurance scheme. Social implications - The Greek Government should evaluate the proposal for the establishment of a national insurance program for earthquake damages. Originality/value - The papers originality/value consists of the construction of a unique data bank of the residential stock of Greece, and a comprehensive proposal for earthquake insurance, based on the best practices of national Cat insurance schemes.