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Article
Peer-Review Record

Rating Liberalization and Efficiency: Evidence from the Property-Liability Insurance Industry

J. Risk Financial Manag. 2025, 18(5), 274; https://doi.org/10.3390/jrfm18050274
by Ming-Kuo Chen 1 and Chi-Hung Chang 2,*
Reviewer 2:
J. Risk Financial Manag. 2025, 18(5), 274; https://doi.org/10.3390/jrfm18050274
Submission received: 17 March 2025 / Revised: 9 May 2025 / Accepted: 15 May 2025 / Published: 16 May 2025
(This article belongs to the Section Financial Markets)

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Using data on property-liability insurers in Taiwan from 2001 to 2019, this paper investigates whether the rating liberalization brought about improvements in efficiency and productivity of the property-liability insurance market. Employing data envelopment analysis,  they found that technical, cost, and revenue efficiencies have improved after rating liberalization. By decomposing the change in productivity, it was shown that the technology change is the one that contributes most to the improvement in productivity at the expense of the liberalization.


1. Relevance and justification. The principal novelty of the manuscript requires further refinement. It is suggested that the author(s) initially pinpoint research gaps and subsequently delineate how the manuscript addresses these gaps, thereby contributing to the advancement of knowledge. 

2. Literature review. This section is well written, yet the literature review should be argumentative and integrated and focused on aspects related to the analytical framework. For instance, it is not clear what the weakness of each paper is, which the authors seek to fill. That is, they should clarify the contribution of this paper to previous studies.  Focusing on more recent studies on different types of liberalization, productivity analysis would strengthen the literature review section.

3. Modeling approach. It is commendable that they used the data envelopment analysis. However, considering the data's complex nature and mechanism design advancements, they should explore or justify why they did not choose alternative models, like machine learning approaches and general equilibrium modeling. These methodologies could address additional aspects of your data, endogeneity and or non-linear complexities. Including a comparative analysis or justification for excluding these methods would significantly update and complete the methodology section of this manuscript.


5. Results and Economic Significance:

5.1 The statistical outputs are well-presented, yet the results would strongly benefit from a discussion that extends beyond the numerical interpretations. A comprehensive account of how these findings interact with economic theories, existing policies, and the practical mechanisms of the economy of Taiwan, as well as implications for economies in similar conditions, is integral. The manuscript should provide a narrative that articulates the economic significance of the results, yielding a more substantial contribution to academic discourse and policymaking.

5.2 Deepen the analysis and interpretation of the results. The results section presents several findings, but the interpretation is often superficial. There is a need for a deeper analysis of why certain outcomes occur. For example, they should discuss more broadly why removing rate controls favors increased efficiency for property liability insurers.

5.3 This section of results does not effectively articulate past revised studies. It might be helpful to explicitly state how the findings of this study compare or contrast with those from other similar studies, particularly in terms of their implications for policy

6. Finally, the authors should provide more policy implications relevant to what is found in the current paper. Recommended concise discussion that leads to policy implications.

Author Response

Thank you for your comments and guidance. Please refer to the attached file for our response.

 

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

Manuscript Number- jrfm-3548555: Rating liberalization and efficiency: Evidence from the proper-ty-liability insurance industry.

 

Let me begin by saying that the paper is well written, has a clear structure and is generally easy to follow. However, the following suggestions would improve the quality of the paper.

 

  • The paper relies heavily on DEA and MPI, but there is no discussion of robustness checks or sensitivity analysis to verify the stability of the results. Consider performing sensitivity analysis using alternative model specifications or adopting a bootstrap DEA approach to assess the robustness of efficiency estimates. This would enhance the reliability of the findings.

 

  • The contribution of the manuscript is not clearly articulated.

 

  • While the paper highlights the impact of liberalization, it does not sufficiently address changes in market competition or structure resulting from deregulation. A discussion on how market concentration, entry/exit dynamics, or changes in competitive intensity influenced efficiency post-liberalization would strengthen the analysis. Using Herfindahl-Hirschman Index (HHI) or similar measures could provide deeper insights.

 

  • Some terms such as “loading charge,” and “rate-making liberalization” could be briefly defined for non-specialist readers.

 

  • The introduction provides a detailed overview of the context and motivation for the study. However, it lacks appropriate citations to support key statements and claims. To strengthen the theoretical foundation and contextual background, I recommend incorporating relevant references.

 

 

  • I recommend extending the study to include an evaluation of profit efficiency, as profit maximization is the ultimate objective for insurers. Assessing profit efficiency would provide a more comprehensive understanding of how deregulation impacts insurers’ ability to optimize revenues and control costs simultaneously.

 

  • Extending the data beyond 2019 would allow the inclusion of recent data, enabling a more thorough assessment of market trends, post-liberalization impacts, and the influence of any significant regulatory or economic changes in the subsequent years.

 

  • Policy implications and limitations are missing.

 

  • Update the citations to include more recent and relevant literature

 

  • Minor typographical errors were observed in the text. A thorough proofreading is recommended to improve the overall presentation.

Thank you for the opportunity to review your work. Best of luck with your research!

 

Comments for author File: Comments.docx

Comments on the Quality of English Language

The quality of English is generally good, but there are some grammatical errors and inconsistencies that need to be addressed for improved clarity and coherence.

Author Response

Thank you for your comments and guidance. Please refer to the attached file for our response.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

The authors have satisfactorily addressed my concerns.

Reviewer 2 Report

Comments and Suggestions for Authors

.

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