Efficiency measurement of life insurers of India through the eyes of data envelopment analysis (DEA)

The technical efficiency, overall technical efficiency, and scale efficiency of the Life Insurance Companies operating in India, were measured through the application of nonparametric linear programming technique Data Envelopment Analysis (DEA) by the researchers. The ‘Intermediation Approach’ was used to define the inputs and outputs in computing the efficiency scores. The empirical results confirmed that the LIC of India, Max New York Life Insurance Co. Ltd., and the SBI Life Insurance Co. Ltd. are the best insurers among all the sampled companies with a perfect-efficiency score ‘one’ in respect of all the three fronts (OTE, PTE and SE) of efficiencies considered under the study. In all, 13 companies were found to be inefficient on the front of OTE and PTE, and 9 companies were found to be inefficient on the front of SE. The overall performance of life insurance companies in India is found to be very shambling having a very low overall technical inefficiency score (mean score 0.510).