Cost Efficiency Functions of Thailand's Insurance Industry

This study evaluated cost efficiencies of insurance firms in Thailand. Three functional forms, i.e. translog, fourier, and linear spline were explored using distribution free approach. The analysis used panel data of life and non-life insurers of 99 firms (103 firms in total) during 1997 to 2003. The results found that the cost efficiencies from the three functions are not notably different in terms of parameter estimation, efficiency scores and tobit model. In addition, the results from tobit model showed that asset, premium, market share, ROA, and fund capital significantly affect the cost efficiencies.