1. Jian Wen Georgia State University ARIA 2007, Quebec City
Brief Discussion on Chen et al.’s
Nonspecialized Strategy versus Specialized Strategy: Evidence from the Property-Liability Insurance Industry
Jian Wen
Georgia State University
ARIA 2007, Quebec City

2. Review of the Paper Contribution Methodology and Data
First to examine the efficiency performance and scope economy for nonspecialists and specialists for property and liability industry in the U.S.
Methodology and Data
Data Envelopment Analysis (DEA) and Stochastic Frontier Approach
NAIC for PL insurers from 1997 to 2004
08/06/2007
ARIA’07 Discussion

3. Review of the Paper (Cont.)
Results
Small nonspecialists are more likely to realize cost scope economy and suffer revenue and profit scope diseconomies compared to larger ones.
Both the nonspecialists hypothesis and the specialists hypothesis hold for different types of property-liability insurers.
08/06/2007
ARIA’07 Discussion

4. Suggestions More detailed descriptions of data analysis
Apply alternative translog model in scope economy estimation in case outputs are equal to zero.
Some quoted papers are not listed in the references, such as Vivian and Lai (1995) on page 2.
08/06/2007
ARIA’07 Discussion

5. Suggestions (Cont.)
It’ll be interesting to study this topic in the framework of financial integration after Gramm-Leach-Bliley Act of 1999, which is theoretically predicted to affect the efficiency performance and scope economies of an involved insurer.
08/06/2007
ARIA’07 Discussion