Productivity of the Indian non-life insurance sector

2019 ◽  
Vol 69 (4) ◽  
pp. 633-650
Author(s):  
Ashiq Mohd Ilyas ◽  
S. Rajasekaran
Keyword(s):  
Life Insurance ◽  
Average Rate ◽  
Insurance Companies ◽  
Scale Efficiency ◽  
Index Number ◽  
Content Type ◽  
Insurance Sector ◽  
Index Number Theory ◽  
Practical Implications ◽  
Observation Period

Purpose The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of total factor productivity (TFP) over the period 2005–2016. Design/methodology/approach This study utilises Färe‒Primont index (FPI) to access the change in TFP and its components: technical change, technical efficiency and mix and scale efficiency over the observation period. Moreover, it employs the Mann–Whitney U-test to scrutinise the difference between the public and the private insurers in terms of growth in productivity. Findings The results reveal that the insurance sector possesses a very low level of TFP. Also, the results divulge an improvement of 11.98 per cent in TFP of the insurance sector at an annual average rate of 12.41 per cent over the observation period. The growth in productivity is mainly attributable to the improvement of 10.81 per cent in the scale‒mix efficiency. The progress in scale‒mix efficiency is mainly the result of improvements in residual scale and residual mix efficiency. The results also show that the privately owned insurers have experienced a high productivity growth rate than the state-owned insurers. Practical implications The results hold practical implications for the regulators, policymakers and decision makers of the Indian non-life insurance companies. Originality/value This study is the first of its kind to use FPI, which satisfies all economically relevant axioms and tests defined by the index number theory to comprehensively access the change in TFP of the Indian non-life insurance sector.

Total factor productivity of the non-life insurers in India: Malmquist index with a new decomposition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ashiq Mohd Ilyas ◽  
S. Rajasekaran
Keyword(s):  
Total Factor Productivity ◽  
Life Insurance ◽  
Economies Of Scale ◽  
Negative Impact ◽  
Malmquist Index ◽  
Scale Efficiency ◽  
Factor Productivity ◽  
Decomposition Approach ◽  
Content Type ◽  
Insurance Sector

PurposeThis paper aims to measure the change and the sources of change in total factor productivity (TFP) of the Indian non-life insurance sector over the period 2005–2016.Design/methodology/approachThis study employs the bootstrapped Malmquist index (MI) to assess the changes in the TFP and adopts a decomposition approach proposed by Balk and Zofío (2018). Moreover, it utilises truncated regression to identify the determinants of the TFP. In addition, it employs Wilcoxon-W test and t-test to scrutinise the difference between the state-owned and the private insurers in terms of variations in TFP and its various components.FindingsThe results divulge a miniature improvement in TFP of the insurance sector, which is primarily attributable to the improvement in scale efficiency (economies of scale). The results also reveal that there are no significant TFP differences across the ownership. However, private insurers have better scale efficiency and lower input-mix efficiency than state-owned insurers. In addition, the results unveil that size, diversification and reinsurance have a negative impact on the TFP, while age has a positive impact on it.Practical implicationsThe results may help the policymakers to frame new consolidation policies. Moreover, the findings may guide the decision-makers of the Indian non-life insurance companies to abate inefficiency and improve TFP.Originality/valueThis study estimates bias-corrected changes in TFP and efficiency in the non-life insurance sector. Moreover, it adopts an elaborated decomposition of the MI to identify the true sources of change in the TFP.

Revenue efficiency evaluation of life insurance companies in India: identification of leaders and laggards

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aparna Bhatia ◽  
Megha Mahendru
Keyword(s):  
Life Insurance ◽  
Empirical Work ◽  
Insurance Companies ◽  
Data Envelopment ◽  
Data Set ◽  
Content Type ◽  
Insurance Sector ◽  
Efficiency Performance ◽  
Revenue Efficiency ◽  
Indian Insurance

PurposeThe purpose of this article is to evaluate revenue efficiency performance of life insurance companies in India. The study also compares if private or public insurance sector is more “revenue efficient”. Furthermore, the study determines the nature of return to scale (RTS) and identifies the leaders and laggards amongst insurance companies operating in India.Design/methodology/approachRevenue efficiency is calculated by employing data envelopment analysis – a non-parametric approach, on a data set of 24 insurance companies over the period 2013–2014 to 2017–2018.FindingsThe empirical results suggest that life insurance companies in India could generate only 34.4% of revenue, which is very less than what these are expected to generate from the same inputs. Majority of life insurance companies operating in India are operating at decreasing return to scale (DRS). There is a reduction in leaders and the highest proportion of companies is falling in the category of laggards.Originality/valueAs per the best knowledge of researchers, no empirical work has been carried out with respect to measuring the revenue efficiency of Indian insurance companies. The current study appropriately fills the gap by not only calculating the revenue efficiency scores of insurance companies in India but also provides insights into the causes of revenue inefficiencies. It also gives implications for efficient and effective management of insurance companies.

The role of explicit ethics institutionalization and management accountability in influencing newcomer trust

2017 ◽  
Vol 25 (4) ◽  
pp. 613-627
Author(s):  
Lu-Ming Tseng ◽  
Chi-Erh Chung
Keyword(s):  
Life Insurance ◽  
Design Methodology ◽  
Job Dissatisfaction ◽  
Insurance Companies ◽  
Content Type ◽  
Mediating Role ◽  
Ethics Institutionalization ◽  
The Relationship ◽  
Practical Implications

Purpose It was common for newcomers to organizations to feel anxiety and uncertainty. Yet, gaining the newcomers’ trust may contribute to solving these problems. The purpose of this paper is to explore the impacts of explicit ethics institutionalization and management accountability on newcomer trust in manager and company. Design/methodology/approach A sample of novice salespeople in the life insurance companies in Taiwan was used to investigate the relationships among the constructs. Findings It was found that newcomers’ recognition of explicit ethics institutionalization was positively associated with the newcomers’ perception of management accountability, and the perception was positively related to trust in manager and company. Practical implications Explicit ethics institutionalization and management accountability could play an important role in enhancing newcomer trust. Thus, it was suggested that researchers and managers should focus on these issues and considered how explicit ethics institutionalization and management accountability could be enhanced in the workplace. Originality/value Newcomer distrust may lead to newcomer job dissatisfaction and newcomer turnover behaviors. This research examines the mediating role of management accountability in the relationship between explicit ethics institutionalization and newcomer trust.

Determinants of profitability of life and non-life insurance companies: evidence from Ecuador

2019 ◽  
Vol 14 (5) ◽  
pp. 831-872
Author(s):  
Segundo Camino-Mogro ◽  
Natalia Bermúdez-Barrezueta
Keyword(s):  
Latin American ◽  
Life Insurance ◽  
Insurance Companies ◽  
Data Envelopment ◽  
Data Set ◽  
Content Type ◽  
Insurance Sector ◽  
Main Determinants ◽  
The Interest Rate ◽  
First Time

Purpose The purpose of this paper is is to identify the main determinants of insurance profitability on life and non-life segments to obtain which variables affect in each market of the Ecuadorian insurance sector. Design/methodology/approach The authors use a large panel data set with financial information from 2001 to 2017 and estimate the determinants through a panel corrected standard errors regression. Findings The authors found that net premiums, technical reserves, capital ratio and score efficiency are micro-determinants in the life insurance sector, whereas in the non-life sector, the micro-determinants include also claim level and liquidity ratio; moreover, the authors found that HHI is a determinant of profitability only in the life insurance. Among the macro determinants set, the authors found that the interest rate has also a significant impact both in the life and non-life insurance. Originality/value The authors analyze a dollarized emerging country, which is the first time in this kind of studies. The authors also include the structure-conduct-performance and relative market power paradigm as well as the ES hypothesis, calculated through the data envelopment analysis, as determinants of insurance profitability. Finally, this is the first research to examine the determinants of profitability in Latin American and Caribbean insurers.

Financial performance assessment using Grey relational analysis (GRA)

2019 ◽  
Vol 9 (4) ◽  
pp. 502-516 ◽  
Author(s):  
Anandarao Suvvari ◽  
Raja Sethu Durai S. ◽  
Phanindra Goyari
Keyword(s):  
Performance Analysis ◽  
Financial Performance ◽  
Life Insurance ◽  
Grey Relational Analysis ◽  
Statistical Distribution ◽  
Insurance Companies ◽  
Content Type ◽  
Relational Analysis ◽  
Grey Relational ◽  
Practical Implications

Purpose Traditional statistical methods to study the financial performance of any industry have many barriers and limitations in terms of the statistical distribution of the financial ratios, and, in particular, it considers only its positive values of it. The purpose of this paper is to estimate the financial performance of 24 Indian life insurance companies for the period from 2013 to 2016 using Grey relational analysis (GRA) proposed by Deng (1982) that accommodates the negative values in the analysis. Design/methodology/approach Financial performance of 24 Indian life insurance companies for the years from 2013–2014 to 2015–2016 is examined using a total of 14 indicators from capital adequacy ratios, liquidity ratios, operating ratios and profitability ratios (PR). The methodology used is GRA to obtain the Grey grades to rank the performance indicators, where higher relational grade shows better financial performance, and a lower score depicts the scope for improving the performance. Findings The results rank the insurance companies according to their financial performance in which Shriram insurance stands first with higher relational grade score, followed by the companies like IDBI Insurance, Sahara Insurance and Life Insurance Corporation of India. The main finding is that PR which have negative values are playing a crucial role in determining the financial performance of Indian life insurance companies. Practical implications This study has far-reaching practical implications in twofold: first, for the Indian life insurance industry, they have to concentrate more on PR for better financial health and, second, for any financial performance analysis, ignoring negative value ratios produce biased inference and GRA can be used for better inference. Originality/value This study is the first attempt to evaluate the financial performance of Indian life insurance using the GRA methodology. The advantage of GRA is that there is no restrictions on the statistical distribution of the data and it also accommodates the negative values, whereas all the other traditional methods insist on the statistical distribution of data, and, more importantly, they cannot handle negative values in the performance analysis.

A business model analysis of Kmart’s downfall

2019 ◽  
Vol 47 (2) ◽  
pp. 111-128
Author(s):  
Humberto A. Brea-Solís ◽  
Emili Grifell-Tatjé
Keyword(s):  
Business Model ◽  
Model Performance ◽  
Index Number ◽  
Dominant Position ◽  
Content Type ◽  
Frontier Analysis ◽  
Index Number Theory ◽  
The Empirical Analysis ◽  
Practical Implications ◽  
Correct Implementation

Purpose The purpose of this paper is to understand how a major retailer like Kmart lost its dominant position in the American retail industry. Design/methodology/approach This paper contains a decomposition of profit change into meaningful economic drivers using a methodology that combines frontier analysis with index number theory. The empirical analysis is complemented with a description of Kmart’s business model produced from corporate documents and other sources. Findings A quantification of Kmart’s business model performance expressed in monetary terms. This assessment is presented by CEO tenures showing the contribution of different economic drivers to the evolution of profits. Practical implications The study’s empirical results highlight the importance of the correct implementation of all aspects of the business model in order to achieve success. Originality/value This paper presents a new empirical framework to assess business model performance. Despite Kmart’s important role in American discount retailing history there have been very few studies that have analyzed its downfall. This paper contributes by filling that gap.

An empirical investigation of efficiency and productivity in the Indian non-life insurance market

2019 ◽  
Vol 26 (7) ◽  
pp. 2343-2371 ◽  
Author(s):  
Ashiq Mohd Ilyas ◽  
S. Rajasekaran
Keyword(s):  
Life Insurance ◽  
Productivity Growth ◽  
Returns To Scale ◽  
Malmquist Index ◽  
Scale Economies ◽  
Content Type ◽  
Insurance Sector ◽  
Bootstrap Approach ◽  
Efficiency And Productivity ◽  
Practical Implications

Purpose The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of efficiency, productivity and returns-to-scale economies. In addition to this, it identifies the determinants of efficiency. Design/methodology/approach This study employs a two-stage data envelopment analysis (DEA) bootstrap approach to estimate the level and determinants of efficiency. In the first stage, the DEA bootstrap approach is employed to estimate bias-corrected efficiency scores. In the second stage, the truncated bootstrapped regression is used to identify the effect of firm-level characteristics on the efficiency of insurers. Moreover, the bootstrapped Malmquist index is used to examine the productivity growth over the observation period 2005–2016. Findings The bootstrapped DEA results show that the Indian non-life insurance sector is moderately technical, scale, cost and allocative efficient, and there is a large opportunity for improvement. Moreover, the results reveal that the public insurers are more cost efficient than the private insurers. It is also evident that all the insurers irrespective of size and ownership type are operating under increasing returns to scale. Malmquist index results divulge an improvement in productivity of insurers, which is attributable to the employment of the best available technology. Bootstrapped DEA and bootstrapped Malmquist index results also show that the global financial crisis of 2008 has not severely affected the efficiency and productivity of the Indian non-life insurance sector. The truncated regression results spell that size and reinsurance have a statistically significant negative relationship with efficiency. It also shows a statistically significant positive age–efficiency relationship. Practical implications The results hold practical implications for the regulators, policy makers, practitioners and decision makers of the Indian non-life insurance companies. Originality/value This study is the first of its kind that comprehensively investigates different types of robust efficiency measures, determinants of efficiency, productivity growth and returns-to-scale economies in the Indian non-life insurance market for an extended time period.

Buying decision in the marketing of Sharia life insurance (evidence from Indonesia)

2018 ◽  
Vol 9 (2) ◽  
pp. 370-383 ◽  
Author(s):  
Amron Amron ◽  
Usman Usman ◽  
Ali Mursid
Keyword(s):  
Life Insurance ◽  
Structural Equation ◽  
Strong Association ◽  
Insurance Companies ◽  
Equation Modeling ◽  
Future Research ◽  
Promotion Strategy ◽  
Content Type ◽  
General Insurance ◽  
Practical Implications

Purpose The purpose of this study is to examine the effect of satisfaction (SAT) and trust (TRS) on word of mouth (WOM) and buying decision (BD) for Sharia life insurance in the Muslim society of Indonesia. Design/methodology/approach The research design was taken from 386 Muslim customers who held Sharia life insurance policies using the approach of purposive sampling in four cities in Indonesia, namely, Jakarta, Surabaya, Makassar and Medan. The hypothesis testing used structural equation modeling. Findings The research results show SAT and TRS have effects on WOM. Moreover, WOM has a significant effect on the BD of the customers of the Sharia life insurance product. Research limitations/implications This study focused only BD of customers who bought Sharia life insurance products, so the results cannot be generalized to other types of Sharia insurance. Therefore, future research could consider other Sharia insurance products, such as Sharia general insurance. Practical implications In relation to the testing of SAT and TRS on WOM, this study examined the influence of the two variables on WOM and BD. This study can serve as reference for Sharia life insurance companies when formulating promotion strategy. Originality/value This study justified the strong association between SAT and TRS for WOM and BD in Sharia life insurance in an integrated way.

Indian Life Insurance Market and Corporate Performances: A Study of Selected Firms

2016 ◽  
Vol 4 (1) ◽  
Author(s):  
Joy Chakraborty ◽  
Partha Pratim Sengupta
Keyword(s):  
Market Share ◽  
Life Insurance ◽  
Market Concentration ◽  
Insurance Market ◽  
Insurance Companies ◽  
Insurance Company ◽  
Life Insurance Company ◽  
Insurance Sector ◽  
Life Insurers ◽  
Company Limited

In the pre-reform era, Life Insurance Corporation of India (LICI) dominated the Indian life insurance market with a market share close to 100 percent. But the situation drastically changed since the enactment of the IRDA Act in 1999. At the end of the FY 2012-13, the market share of LICI stood at around 73 percent with the number of players having risen to 24 in the countrys life insurance sector. One of the reasons for such a decline in the market share of LICI during the post-reform period could be attributed to the increasing competition prevailing in the countrys life insurance sector. At the same time, the liberalization of the life insurance sector for private participation has eventually raised issues about ensuring sound financial performance and solvency of the life insurance companies besides protection of the interest of policyholders. The present study is an attempt to evaluate and compare the financial performances, solvency, and the market concentration of the four leading life insurers in India namely the Life Insurance Corporation of India (LICI), ICICI Prudential Life Insurance Company Limited (ICICI PruLife), HDFC Standard Life Insurance Company Limited (HDFC Standard), and SBI Life Insurance Company Limited (SBI Life), over a span of five successive FYs 2008-09 to 2012-13. In this regard, the CARAMELS model has been used to evaluate the performances of the selected life insurers, based on the Financial Soundness Indicators (FSIs) as published by IMF. In addition to this, the Solvency and the Market Concentration Analyses were also presented for the selected life insurers for the given period. The present study revealed the preexisting dominance of LICI even after 15 years since the privatization of the countrys life insurance sector.

The influence of Education, Occupation and Income on Perceived Customer Value

2015 ◽  
Vol 3 (1) ◽  
Author(s):  
Amit Sharma ◽  
Bodh Raj Sharma
Keyword(s):  
Life Insurance ◽  
Customer Value ◽  
Demographic Variables ◽  
Insurance Companies ◽  
Primary Data ◽  
Insurance Sector ◽  
Significant Difference ◽  
Quota Sampling ◽  
Indian Insurance ◽  
Perceived Customer Value

The aim of this paper is to assess empirically perceptual gap among the customers having different educational qualification, occupation and income regarding customer value in Indian insurance sector. It is a fact that insurance sector has been growing tremendously despite a lot of competition in the marketplace. The study is based upon the primary data obtained from customers of four life insurance companies belonging to various districts of J&K through quota sampling. A questionnaire was framed containing items of demographics and statements measuring customer value based upon seven point Likert scale. The findings indicate that the demographic variables viz., qualification, occupation and monthly income, there is no significant difference regarding perceived customer value among the life insurance players.

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