A study on the efficiency of property-liability insurance companies using Data Envelopment Analysis

A study on the efficiency of property-liability insurance companies using Data Envelopment Analysis

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Article ID: iaor19992377
Country: South Korea
Volume: 23
Issue: 2
Start Page Number: 201
End Page Number: 217
Publication Date: Jun 1998
Journal: Journal of the Korean ORMS Society
Authors: ,
Keywords: statistics: data envelopment analysis
Abstract:

This paper attempts to show how DEA (data envelopment analysis), a nonparametric productivity analysis method, can be employed for insurance companies to improve their respective efficiencies and competitiveness. Specifically, we measured relative technical efficiencies and returns to scale of 11 Korean property-liability insurance companies using BCC model, and raised several issues including the cause of inefficiency, benchmarking toward references set and resource allocation concerning the insurance companies. Also, in order to monitor the variability of the research results over periods, we employed longitudinal analysis to see the moving patterns of technical efficiencies, returns to scale and frequencies included in the reference set of the individual insurance companies under consideration. The methodology and the results in this paper may also serve as a useful guideline for individual insurance companies to set their respective business strategies.

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