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Profit Benchmarking of Indian General Insurance Companies

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  • Ram Pratap Sinha

Abstract

While there are several studies regarding the efficiency of Indian general insurance companies, the field of profit efficiency remains unexplored till date. In the present paper, a quantity-based ratio form model has been adopted for the estimation of profit efficiency. The profit efficiency scores so derived are then decomposed into revenue and cost efficiency components. Bootstrap-based and bias-corrected lower and upper bounds of profit, revenue and cost efficiency scores have also been estimated. The data set includes information pertaining to fifteen general insurance companies for the period 2011-12 to 2016-17. The outcome shows that the public sector insurers have done well in terms of revenue efficiency but needs to be concerned about cost-efficiency. Further, we have explored the linkage of profit, revenue and cost efficiency with solvency ratio and return on equity using Tobit regression. The results show that profit, revenue and cost efficiency have a strong linkage with both solvency ratio and return on equity.

Suggested Citation

  • Ram Pratap Sinha, 2021. "Profit Benchmarking of Indian General Insurance Companies," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 73-92.
    • Handle: RePEc:bas:econst:y:2021:i:7:p:73-92
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    References listed on IDEAS

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    Cited by:

    1. Shoaib Alam Siddiqui & Ali Shaddady, 2023. "How Profit Efficient is Indian Life Insurance Industry: A DEA Study," SAGE Open, , vol. 13(4), pages 21582440231, December.

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    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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