Evaluating Efficiency of Indian Life Insurance Companies using Data Envelopment Analysis

Authors

  • Siddhartha Sankar Saha
  • Mitrendu Narayan Roy

DOI:

https://doi.org/10.33516/rb.v43i4.45-66p

Keywords:

Data Envelopment Analysis, Life Insurer, Pure Technical Efficiency, Scale Efficiency, Technical Efficiency.

Abstract

In last one decade, the life insurance companies operating in India have made a significant progress in terms of savings mobilization and resource generation in Indian financial market. In view of reforms of the Indian life insurance sector, the relative performance of life insurance companies is of interest to both academician-researchers and policy makers. Since the insurance sector was deregulated a few years back, number of players in the insurance sector is 24 comprising 23 private life insurers and one public life insurer. The present paper intends to use Data Envelopment Analysis (DEA) to compare the efficiency of all 24 life insurance companies operating in India for the year 2015-16 using a three input-three output framework. Based on existing literature, the input variables selected for the paper are: commission expenses, operating expenses and paid up equity capital, while the output variables are: net premium, total benefits paid and income from investment. The study mainly estimates the technical efficiency (TE) scores of all 24 life insurers using Charnes Cooper Rhodes (CCR) (1978) envelopment model and identifies the efficient life insurers in the year 2015-16. The study also decomposes technical efficiency score into pure technical efficiency and scale efficiency using Banker Charnes Cooper (BCC) (1984) envelopment model to find out the impact of managerial performance and scale of operation on overall efficiency of life insurance companies.

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Published

2018-01-01

How to Cite

Saha, S. S., & Roy, M. N. (2018). Evaluating Efficiency of Indian Life Insurance Companies using Data Envelopment Analysis. Research Bulletin, 43(4), 45–66. https://doi.org/10.33516/rb.v43i4.45-66p

Issue

Volume 43, Issue 4, January 2018

Section

Articles
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Europe PMC

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