An Empirical Analysis Of Cost Efficiency And Profit Efficiency In Chinese Insurance Company

The issue of efficiency is one of the core problems in the economic study. The efficiency of the insurance company reflects its management level, development potential and core competitiveness. After more than30years of rapid growth, insurance industry becomes one of the highlights of China’s financial industry. However, inefficiency is becoming the barrier restricting the insurance companies’continually healthy development. Therefore, under the background that full opening to the outside world and the gradually fierce competition, to measure insurance companies’efficiency level and research efficiency restriction factors and seek the ways to improve efficiency, has the extremely important theory and practice significance.Based on the related researches both domestically and abroad, this paper introduces basic connotation and research approach of the insurance efficiency. With Stochastic Frontier Approach (SFA), this paper measures the cost efficiency and profit efficiency of22Chinese insurance companies during the period from2007to2010, and analyses the key determinants of efficiency. The results show that:the average cost efficiency of sample insurance companies is68.39%, and profit efficiency is67.78%; Chinese native insurance companies’cost efficiency is higher than foreign or joint-venture insurance companies, but there are no significant differences in profit efficiency; the average cost efficiency of sample property and casualty Insurance companies is higher than life insurance, but profit efficiency is lower; Asset scale and the quality of staff have a significant effect on insurance companies’efficiency. Finally, combined with China’s special national conditions, this paper gives some policy recommendations on how to improve operational efficiency of insurance companies.