A Study Of Life Insurer Operating Efficiency In China Based On DEA-malmquist Index Approach

The issue of efficiency is eternal theme of Economics and Finance．As far as insurancecompany concerned， efficiency is that commercial insurance companies are usingcombination of insurance resources and trying to make the society resources flowing toproduce max of products or services．It is the generic term of input-and-output ability，competitive ability of market,the ability of sustainable development.With china openning theinsurance market, China’s insurance companies will face the severe internationalcompetition.The competitiveness of commercial insurance industry is the key to itssustainable development,and the efficiency is also the centralized embodiment of insurancecompetitiveness.Thus,in the long term,the development of China’s insurance industry isaccording to efficiency. Therefore, the studying of insurance companies efficiency,especiallylife insurance companies operating efficiency，and identifying the main factors that affectefficiency and conducting an in-depth research，are of great significance，no matter of therelevant institutions or academic community．On the basis of comprehensive understanding of the insurance industry efficiency studyprogress and the insurance industry efficiency theories and methods of assessment，This paperis to estimate the efficiency of the2005-2009life insurance companies by DEA method，including technical efficiency,pure technical efficiency and scale efficiency.At the sametime,it takes advantage of the nonparametric malmquist approach,and decomposed the indexinto two components:technical change and efficiency change.Based on these, building a Tobitregression model is to analyze the factors which affect the efficiency.Tobit models were usedto investigate the determinants of efficiency.Empirical results show that the average technical efficiency of the life insurance industry isdecreasing year by year. It’s mainly caused by pure technical inefficiency. On one hand, theefficiency of the international life insurers is forced to be low by the new entry and largeinvestment.On the other hand, the new-coming insurers have advantage in technical efficiencythan the traditional life insuers,but the resistance of financial crisis is weaker.Together withthe result of Malmquist index, it shows that life insurers are facing more furious competitionand greater challenge nowadays in China.Tobit regression model shows that the size ofcompany and the age of the companies are the most important determinants of efficiency;Thehuman capital variables are the least important variables;The ownership variable producedsome mixed results;The impact of market share is indefinite. Finally,based on the results of empirical analysis,making the recommendations accordingly soas to improve the efficiency of life insurance company in China.