J. David Cummins Q&A: Reflections on his career

Dr. J. David Cummins rDr. He currently holds the same title as Professor Emeritus at Temple. He also served as the Director of the Advanta Center for Financial Institutions at Temple.  Prior to joining Temple University, Dr. Cummins taught for 35 years at the Wharton School of the University of Pennsylvania where he was the Harry J. Loman Professor of Insurance and Risk Management.

Dr. Cummins’ research focuses on insurance economics; financial risk management; productivity and efficiency; and securitization. During his career, Dr. Cummins has published 116 refereed journal articles. His articles appear in the Journal of Risk and Insurance, the Geneva Risk and Insurance Review, the North American Actuarial Journal, the Journal of Banking and Finance, and many more. He also has published  19 books as well as 41 chapters in edited scholarly books about insurance economics. He was president of ARIA from 1986-87, is a life member of the Risk Theory Society, and has chaired over 50 doctoral dissertations.

We sat down with Dr. J David Cummins to discuss his bodies of work, advice he would give PhD students and faculty members and learn what he is looking forward to most in retirement.

While reading your resume, I noticed the research you’ve done is quite extensive. What are representative examples of 3 impactful papers and where has your research led you today?

In examining my body of work, three impactful papers would include:

  • Are all mutuals the same? Evidence from CEO turnover in the US property-casualty industry
    • Organizational form in insurance has been widely studied in the prior literature. Although researchers have recognized sub-types of stock insurers, mutuals have always been considered as a single homogeneous category. To the extent that mutual sub-types behave differently, considering all mutuals the same can result in misleading conclusions. The present study aims to remedy this gap in the literature by considering the full range of mutual firm types. Mutuals are classified as family controlled, association-controlled, and pure mutuals with various sub-types within each group. We analyze corporate governance among mutual sub-types in the U.S. property–casualty (P–C) insurance industry by studying CEO turnover, particularly nonroutine turnover.  The principal finding is that all mutuals are not the same. The probability of nonroutine CEO turnover is lowest for family-controlled, non-association mutuals and highest for association-controlled mutuals.
  • Efficiency, productivity, and scale economies in the U.S. property-liability insurance industry
    • The paper examines efficiency, productivity and scale economies in the U.S. property-liability insurance industry. Productivity change is analyzed using Malmquist indices, and efficiency is estimated using data envelopment analysis. We find that more diversified firms are more likely to achieve productivity and efficiency gains.
  • Systemic Risk and the U.S. Insurance Sector
    • This article examines the potential for the U.S. insurance industry to cause systemic risk events that spill over to other segments of the economy. We examine primary indicators of systemic risk as well as contributing factors that exacerbate vulnerability to systemic events. We find that core activities of insurers do not cause systemic risk but that non-core activities such as derivatives trading can contribute to systemic risk.

I’ve done a lot of research on industry structure, particularly in property casualty insurance. Primarily examining factors such as competition, profitability, and solvency. In addition, I’ve done extensive research on insurance efficiency, which is when you are trying to manage insurance companies relative to an efficient frontier. You examine company characteristics that are associated with firm efficiency and productivity.

I also made major contributions to econometric analysis in the insurance sector and the insurance industry early in my career.

You’ve published many articles with your wife, Mary Weiss, former Deaver Professor at Temple University, can you talk to me about that experience?

It was an amazing experience to be able to work with Mary on several articles. She has been my primary coauthor over the past 20 years, and it has been an invaluable relationship to work with her. She always makes major contributions to everything we do and has caused me to think of some things that I might not have thought of otherwise.

What advice would you give PhD students and new faculty members regarding research, including topics you think are important today?

Keep at it. Too many people will get an idea, dabble into it and not follow through. The idea is critically important, but the follow through is ultimately what counts. In addition, don’t cut corners. Many often think of taking the easier option, but someone is going to notice. When submitting your paper, you must go through a very rigorous review process. If you cut corners on your paper, your reviewer is very likely to pick up on that and reject it all together. You need to keep at it, work hard and don’t cut corners. It will take longer to finish but will be worth it.

Are there any topics you’d be interested in focusing on if you were conducting your research today?

I would focus on many of the topics that I’ve already been focusing on and my goal would be to develop new wrinkles/topics that would advance the field beyond where it is at the present time. There are many areas you could zero in on-industry structure, competition, efficiency, solvency. I recently published a paper coming out of the takaful industry, which is Islamic insurance. This paper, “Economies of Scope, Organization Form and Insolvency Risk: Evidence from the Takaful Insurance Industry,” focuses on the takaful industry (Islamic insurance). Mary and I, in addition to our coauthor Khalid Al Amri, analyzed takafuls in 19 countries. We focused on takafuls that had different organizational forms in how they organize their companies and how efficiently these companies are performing.

What are your fondest memories from your time as an ARIA member?

ARIA has always been a central part of my professional career from the very beginning. Not only personally, but professionally. One of the best ways I learned was by talking to other ARIA members and bouncing ideas off them. In addition, the annual meeting always one of my favorite parts of ARIA. You may only see your colleagues once a year, so it was very important to me to attend the annual meeting and get to catch up with everyone.

What are you looking forward to most in retirement?

Well, since we are in a pandemic, I will answer in terms of wishful thinking and what we are looking forward to doing in the future and that is travel. We love to travel. We’ve gone many places within the U.S. like Yellowstone, Mesa Verde, the Grand Canyon and many other national parks and monuments. In addition, we love visiting other countries. Our goal is to get to Korea and India.

Do you have a fun fact you’d like to share?

I am a mega fan of jazz, particularly the “hard bop” style predominant in the 50s and 60s – John Coltrane, Art Blakey, Miles Davis etc. – and have a large collection of cds and some vinyl.  I also am a huge pro football fan – favorite teams are the Eagles, the Saints, and the Seahawks.