An Empirical Study On Efficiency Of Life Insurance Companies In China Based On DEA Method

Efficiency is one of the key topics in Economics. A lot of researches on efficiency of life insurance companies have been done abroad however it's quite new in China.This paper aims to accurately understand the meaning of efficiency, systematically grasp the DEA method which has been the main non-parametric method in efficiency research, and apply this method to China's life insurance companies so as to provide an overview of the efficiency condition of China's life insurance industry and to pave the way for future research.In this paper, the meanings and main research methods of efficiency were systematically introduced, a review of the original efficiency model established by Farrell as well as C~2R and BCC model were detailed provided. An empirical research on the technical efficiency including pure technical efficiency and scale efficiency of 11 selected life insurance companies in China were done. All the empirical researches were realized in Excel 2003.Notably, after the review of some related researches in China, their main breakthroughs and deficits were analyzed. This might give a constructive indication for future research. In terms with the selection of inputs and outputs, some related researches both in and abroad were consulted with and two different groups of outputs were selected at last. Based on the calculation of every company's efficiencies, the 11 companies were classified into four categories according to the characters of their efficiencies. Additionally, the relations between the efficiencies based on two different groups of inputs and outputs were analyzed based on which the 11 companies were put into orders. In the end, problems and difficulties confronted in this paper were mentioned objectively and some countermeasures and directions for future research were brought forth.This paper found that little corresponding relation can be found out between the four categories of the 11 life insurance companies and their external characteristics. This finding indicates that the efficiencies of life insurance companies in China are highly-dispersed. So future research based on internal mechanisms in different companies are quite necessary.