A Comparative Study of the Business Efficiency of Chinese Life Insurance Industry Based on Improved Three-Stage DEA Method

This paper introduces a SORM(semi-oriented radial measure) model as the improvement of three-stage DEA method to measure the efficiency of 32 Chinese life insurance companies from 2006 to 2010. The 32 companies can be divided into Chinese-funded companies and foreign-funded companies. We compare and analyze the result of these two kinds of companies respectively and find that the technical and management level of foreign-funded life insurance companies is a little higher than that of Chinese-funded life insurance companies which have an advantage in the average scale efficiency yet. But the foreign-funded companies tend to catch up with and even surpass the Chinese-funded companies in the average scale efficiency in recent years. The environmental and random factors have a greater impact on Chinese-funded life insurance companies than on foreign-funded life insurance companies. Besides these the paper investigates the influence of external environmental factor to the efficiency of companies and shows that the increasing of market share and foreign assets share of a company will enhance the waste of its input and the reduction of its efficiency, the business coverage scope and operating time of accompany don't have explicit relationship with its efficiency and the economic situation has an obvious impact on the technical efficiency of Chinese life insurance industry.