Efficiency and Productivity of Indian General Insurers: A post reform analysis

Abstract

The present paper evaluates 10 Indian General Insurance Companies comprising of 4 Public Sector Companies and 6 Private Sector Companies from the year 2002-03 to 2009-10 using the increasingly popular technique Data Envelopment Analysis and Malmquist Analysis for computing the Efficiency and Productivity of this particular sector. The study uses two inputs i.e. Capital and Operating Expenses and one output i.e.Net Premium Income. It has been found that the Technical efficiency of the Private Sector Insurers has been 91.6% which is more as compared to the Technical Efficiency of the Public Sector i.e. 78. 5% indicating that after a decade to liberalization the Private sector has marked its presence in the market. The results of the Productivity Analysis indicates that New India Insurance Company, Oriental Insurance Company, United India Insurance Company, Reliance General Insurance Company and ICICI General Insurance Company have improved their productivity whereas the rest of the insurers have showed the declining hehavior while comparing the initial year with the y ear 2008-09 to 2009-10. The analysis make it evident that the private insurers have improved their efficiency over the time still they should try to utilize the advantages of technological change and technical efficiency in order to improve their productivity. The results have managerial implications for the existing insurers to face the growing competition in the market.