Stock vs. mutual insurers: Long-term convergence or dominance?

We find evidence for long-term convergence of stock and mutual insurers in an analysis of metatechnology DEA efficiency for 2002–2015. This result may emphasize that even though one organizational form may dominate in terms of performance over a certain period as documented by extant literature, insurers operating under the inferior organizational form are under increasing pressure to catch up leading to more homogeneity over the long-term. Thus, dominance of either stock or mutual insurers may be only temporary. For example, we find that in a short-term view stock insurers are more successful in improving efficiency after endogenous turmoil (i.e., company rating downgrades). Different to previous studies focusing on the expense preference and efficient structure hypotheses, we explicitly consider the dynamics of stock and mutual insurer’s technology and efficiency.