A DEA-investigation of efficiency of the Indian general insurance during recession

Abstract

Purpose – The purpose of this paper is to investigate the efficiency analysis of the Indian general insurance sector using data envelopment analysis (DEA) and subsequently assess the impact (if any) of the global slowdown on the performance of the allied sector. Design/methodology/approach – The paper aims to analyze the operating performance of 12 general insurance companies in India between 2006-2007 and 2009-2010 using DEA based on secondary data collected from Insurance Regulatory and Development Authority Annual Reports. Findings – Findings clearly indicate that the global economic slowdown has severely affected the performance of the private sector companies; while the public sector companies exhibited relatively lesser variation in performance levels. Research limitations/implications – The methodology employed in the study estimates relative efficiencies without assuming any functional form; as a result the proper comparison of input utilized with the output produced is not possible. Several other tools like Malmquist Index and two-stage procedure have not been used. Originality/value – The study brings into light the operating characteristics and efficiencies of the Indian general insurance sector during the global slowdown and therefore holds practical value for policy makers and practitioners as well as for the decision makers of the firms employed in the study.

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