Empirical Study Of Efficiency Of General Insurance Companies

As an important pillar of the finance industry, insurance industry plays an essential role in the society. And the general insurance makes great contribution both in the micro and macro economy since it not only helps enterprises recover from losses and restart business after perils, but also makes sure that the social production proceeds smoothly.China restarted its general insurance in1979, and has achieved great success since then. However, compared with general insurance companies in developed countries, China’s general insurance firms still suffer from many drawbacks, among which the inefficiency becomes one of the most urgent problems. Therefore, it is necessary to study the efficiency of China’s general insurance firms and make comparison between them and the general insurance firms in developed countries in order to find out the resolutions to improve the efficiency of China’s general insurance industry. Dating back to more than400years ago, UK’s general insurance has a long history and it has accumulated lots of experiences. As a result, this dissertation chooses the UK’s general insurance companies as object references.This dissertation introduces the concepts and the decomposition of efficiency of general insurance companies, and examine of24general insurance firms applying data envelop analysis. The efficiency of general insurance firms can be decomposed into cost efficiency, allocative efficiency, technical efficiency, pure technical efficiency and scale efficiency. This dissertation will compare the efficiency between the insurance companies of the two countries, and point out the possible reasons which have negative impacts on the efficiency of China’s general insurance industry.And this dissertation mainly has the following merits. First, this topic is innovative since there is little research regarding the comparison of efficiency of general insurance industry between China and developed countries. Second, the data involved ranges from2007to2011, representing the latest efficiency condition of the companies. Third, the method of efficiency analysis-data envelop analysis is chosen with full consideration after a detailed discussion of the possible methods to study efficiency of insurance firms. What’s more, this dissertation exams all the efficiency-cost efficiency, allocative efficiency, technical efficiency, pure technical efficiency and scale efficiency of the general insurance firms, making the whole study relatively comprehensive and systematic.