Financial performance evaluation of domestic life insurers: A comparison of ELECTRE II, SAW and cluster analysis

In this study, we evaluate financial performance of 21 domestic life insurers using SAW (simple additive weighting), ELECTRE II and cluster analysis, and suggest a hybrid approach of combining cluster analysis and ELECTRE II to reclassify the life insurers into more meaningful groups according to their respective financial features. We also perform the sensitivity analysis employing ANOVA and Tukey's test to examine the robustness of ELECTRE II, which would be influenced by decision maker's subjective preference parameters. Consequently, it is shown that ELECTRE II turns out to be a flexible method providing decision makers with useful ranking information especially under fuzzy decision making situation with incomparable alternatives: and hence it can serve as a complementary method to overcome the weakness of classical cluster analysis.