A Comparative Study Of The Efficiency Of Cross-strait Empirical Insurance Companies Based On The DEA Analysis

In recent years, the cross-strait financial businesses started a new situation of open market since China and Taiwan signed the MOU and the ECFA. Businesses will be easier to set up in both two sides to expand their business markets. However, in this increasingly open market, the future perspectives of the insurance industry in the region on both sides will face a common market but, being in two different environments of China and Taiwan to share this highly competitive market, the issue—whether the different operating efficiencies exist between the insurance companies in China and Taiwan— is worth to explore.This study examined forty-two Insurance companies in China and Taiwan as samples, from year 2009, 2011 and 2013, and employed Seiford and Zhu’s(1999)two-stage DEA data analysis as reference. The operation processes of insurance company were divided in to two stages: a marketing stage which represents the sales ability and a profitable stage which represents the true profitability, and discussed the operating efficiency of the two stages respectively. And then the analyses of differences between the variables were used as a reference for performance improvement. Finally, the samples would be categorized according to their differences in the regions, scales(sizes), and financed characteristics, and then their operational efficiencies would be compared. The author hopes that this study would provide an empirical reference to the insurance companies and governments when formulating related policies, for both China and Taiwan.The results of this study are as follows:1. The two-stage DEA method was able to be more in-depth analysis of the operating efficiencies for the insurance companies. Both of the insurance companies in China and Taiwan had excellent performances in the profitable stage, but the stability was not as good as the marketing stage, and the best performance for the two-stage efficiency value was the scale efficiency.2. In terms of variable analysis, business management expenses and various reserves were the two stages which the most urgent needs for improvement which needed to be done, and it is difficult to handle both of them in the improvement of efficiency.3. In terms of region categories, the insurance companies in Taiwan had better performance in the marketing stage, while the insurance companies in China had betterperformance in the profitable stage.4. In terms of scale categories, large-scale insurance companies equipped better marketing efficiency but the situation of saturation occurred. However, middle- and small-scale companies had better performances in profitability efficiency.5. In terms of fund categories, the local companies performed better in marketing efficiency due to their advantages. However, the companies with foreign investment had better performance in profitability efficiency.