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Evaluating the Efficiency of Indian Life Insurance Sector

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Indian Journal of Economics and Development
Volume 16 No. 1, 2020, 72-80
DOI: https://doi.org/10.35716/ijed/19140
Indexed in Clarivate Analytics (ESCI) of WoS
NAAS Score: 4.82
UGC Approved: UGC Care List Group II
Shoaib Alam Siddiqui
Assistant Professor, JSBS, Sam Higginbottom University of Agriculture Technology and Sciences
Allahabad- 211 007 (Uttar Pradesh)
Email: siddiqui.shoaibalam@gmail.com

ABSTRACT

The purpose of study was to investigate the technical efficiency of Indian life insurance companies using data envelopment analysis (DEA) to find the reasons for inefficiency. It aimed to analyze the efficiency of all the 24 life insurance companies operating in India for the period 2013-2017 using DEA based on secondary data collected from the Insurance Regulatory and Development Authority Annual Reports. Findings indicated that the state life insurer, that is, Life Insurance Corporation (LIC) was efficient throughout the entire study period. The private life insurance companies exhibited variations in their performance levels as they were comparatively new in the life insurance sector and of different sizes. Some private life insurers operated efficiently, while some private life insurers were less productive using excessive capital; on the other hand, few life insurers grew fast using technology. The methodology employed in this study estimates relative efficiencies without assuming any functional form; as a result, the proper comparison of input utilized with the output produced was not possible. The study brought into light the operating characteristics and efficiencies of all the Indian life insurance companies during the period 2013-2017 and therefore holds important insights for policy makers and practitioners as well as for the decision makers.

Keywords
Data envelopment analysis, efficiency analysis, life insurance sector, non-parametric analysis.
JEL Codes
C14, C61, C67, G14. G22.

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