Estimating The Capacity,Efficiency,and Productivity Of Syrian Private Insurance Companies

The Syrians are looking toward the end of the war,peace to prevail,life return to normal,and for the economy wheel to revolve.Therefore,attention is directed towards the next stage,the stage of reconstruction,which requires a strong insurance sector that can provide sufficient guarantees for the business sector to make re-investment.Therefore,the research aims to assess the reality of the Syrian private insurance sector from three aspects:The first relates to the optimal capacity of the companies in the studied sample consisting of three private companies.Capacity is expressed as the total premiums that each company can be underwriting.And for its estimation,the goals Programming Model was used.The model has used some variables in the form of indicators approved by the insurance supervisory bodies to monitor the soundness of the financial position of the insurance companies,where the general and administrative expenses rate,retention rate,commission rate and production costs,and the ratio of total premiums to shareholders’ equity were included.The second aspect evaluates the efficiency of 10 private commercial insurance companies in terms of their retention capacity.The data envelopment analysis was used with an output-orientation under variable return to scale.The model used two variables,the first embodied in the total retained premiums to the total premiums,and the second variable was embodied in the rate of loss.The third aspect evaluates the productivity by Malmquist index of companies in terms of the efficiency of their insurance portfolios consisting of nine insurance lines,and the data envelopment model was used,with an output orientation under constant return to scale.The model used four variables,two on the input side 1-Gross written premiums for each insurance line.2-Commissions,production costs,and insurance expenses.And two variables on the output side are 1-The total claims.2-The net profit for each insurance line The first model results showed that the three companies operate with partial capacity,which means they do not use their total capacity.The average capacity exploited in Arabia-National-United companies was estimated at 40%,65%,and 33%,respectively.The analysis turns out the efficiency of the companies in terms of retention capacity management on average 72.6%under variable return to scale and 66.8%under constant return to scale in 2013,while in 2019 it declined to 65.7%under variable return to scale,and 61%under constant return to scale.The analysis results showed that the retention policy adopted by insurance companies in the early years of the war(2013)is superior to that adopted in the later years(2019).This is mainly due to the fact that the American and Western sanctions that were imposed on the Syrian economy at the beginning of the crisis have deprived its companies of dealing with international reinsurance companies,which prompted them to keep a greater percentage of premiums and follow a strict policy in selecting risks,which contributed to raising their efficiency at the beginning of the war.In terms of the portfolios of the three companies,it was found that the insurance lines that comprise the portfolio of the Arabia Insurance Company achieved a productivity growth of 5.1%,at the same time the National Company achieved a growth of 1.9%,while the United Company recorded a decline in its productivity.In addition,the comparison showed a discrepancy between the productivity of insurance lines in the three portfolios and their market shares,which helps insurance companies reconsider their marketing activity and increase focus on lines with high productivity.The previous results indicate that the private insurance sector in Syria is not exploiting its full potential capacity,and there is a great scope for expanding its coverage to reach wider areas than it is now.And it needs to raise its efficiency level in managing the retention capacity and achieve greater profitability from the retained premiums.And it requires reforming the portfolio’s structure and focusing on the lines that achieved high productivity during the past years.The study suggested that insurance companies expand their insurance portfolios by underwriting new lines such as agricultural insurance.Since the agricultural sector is one of the most important main sectors in the Syrian economy,providing insurance coverage contributes to providing food security and social stability for farmers working in this field in the countryside.The research indicated the importance of the Syrian insurance companies taking the initiative to launch the bank deposit insurance project to enhance the strength of the financial system and enhance depositors’ confidence.The study differs from previous studies by evaluating insurance companies during the crisis period,which indicates how companies work in light of wars.To my knowledge,the study dealt with the issue of the efficiency of insurance companies from aspects that were not addressed by previous studies.While previous studies used insurance companies as decision-making units,this study used the insurance lines as decision-making units.