Efficiency Evaluation of Indian General Insurance Companies

The aim of the present paper is to evaluate the efficiency of the Indian general insurance companies and to find out the reason for their inefficiency. The paper intends to rank these companies on the basis of their efficiency. 12 general insurers are studied using Data Envelopment Analysis (DEA) for a period of 12 years, i.e., from 2005-06 to 2016-17. The study is based on secondary data collected from annual reports of insurers and Insurance Regulatory and Development Authority of India (IRDAI). The study concludes that not more than one-third of the insurers are found to be technically efficient. Pure technical efficiency was observed for 50-75% insurers. This makes it clear that the main reason for inefficiency is the scale inefficiency. The same is reinforced by super efficiency results. Public sector companies should reduce their scale dimension and private sector companies should work for the enhancement of their scale dimension, so that they can achieve the most productive scale size and become more efficient.