Analysis of managerial efficiency in insurance sector in the UAE: an emerging economy

Rao, Ananth; Kashani, Hossein A.; Marie, Attiea

doi:10.1108/17439131011074477

Cited by 10 publications

(10 citation statements)

References 22 publications

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“…There are very few studies based on GCC insurers in the existing literature, like (Almulhim & McMillan, 2019;Benyoussef et al, 2019;Naushad et al, 2020) based on Saudi Arabian takaful insurers. Rao et al (2010) measured the managerial efficiency of insurers in the UAE. Al-Amri et al (2012) studied the technical efficiency and productivity changes for GCC countries' 39 insurers during [2005][2006][2007].…”

Section: Rationale Of the Studymentioning

confidence: 99%

“…The presence of foreign players and stiff competition has augmented GCC financial institutions' relevance and insurers' effectiveness. The efficient and productive insurance sector can help strengthen the capital market and economic diversification (Rao et al, 2010). The efficiency measurement of insurance companies plays a vital role in the insurance industry (Brockett et al, 1996).…”

Section: Introductionmentioning

confidence: 99%

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Efficiency drivers of insurers in GCC: an analysis incorporating company-specific and external environmental variables

Bansal

Singh

2021

Cogent Economics & Finance

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The study aims to a comprehensive measure of listed insurance companies' technical efficiency in GCC countries and benchmarking, peer count summary, and measuring productivity changes in the first stage. In the second stage, the technical efficiency, pure technical efficiency, and scale efficiency scores have been regressed with internal (company variables) and external environmental variables. This paper first examines financial freedom and reinsurance activities on 60 insurers' efficiency from all GCC countries during 2016-2019. The results suggest a positive impact of economic freedom, solvency on technical efficiency components, and the negative effect of reinsurance ceding, market concentration on GCC insurers' technical efficiency. In productivity changes, UAE companies are doing well as compared to other countries' insurers. Overall, GCC insurers' efficiency is improving with pure technical efficiency having a CAGR of 2.13% and scale efficiency a CAGR of 2.96%. Based on the peer count summary, only the UAE and Saudi Arabia's companies can be benchmarked against another insurance company. Also, this research is one of the most comprehensive ones in the GCC region; this is the first study on an extensive data set to the best of our knowledge, including conventional insurers operating across GCC countries. This study is based on 60 insurers listed on the stock exchanges of six GCC countries. This will also be the first empirical evidence on the GCC insurers, which measures the impact of companyspecific variables and unique environmental variables separately on the two components of technical efficiency using Tobit regression. The positive association of competition and financial freedom with technical efficiency may encourage Rohit Bansal ABOUT THE AUTHOR Dr. Rohit Bansal holds a doctoral degree in Corporate Finance from the Indian Institute of Technology, Roorkee. He possesses a rich professional experience of over 10 years in Finance, Accounting, and Econometrics. He has published many articles & research papers in various international and refereed journals of repute Elsevier, Taylor & Francis, Springer, Sage, Emerald, and IGI Global, most of them listed in ABDC and Scopus. His research area includes corporate finance, stock markets, and financial markets. He also serves as a reviewer for select journals.

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Section: Rationale Of the Studymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Efficiency drivers of insurers in GCC: an analysis incorporating company-specific and external environmental variables

Bansal

Singh

2021

Cogent Economics & Finance

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“…The study utilized two inputs (Business and administrative expenses, and commission and acquisition costs) and two outputs (direct written premium and reinsurance premium received). Rao (2010) investigated the managerial efficiency of listed firms in UAE. The study utilized the two inputs (administrative and general expenses, and equity and change in legal reserves) and two outputs (rate of return on investments and liquid asset to total liabilities ratio).…”

Section: Literature Reviewmentioning

confidence: 99%

Measuring the Managerial Efficiency of Insurance Companies in Saudi Arabia: A Data Envelopment Analysis Approach

Naushad¹,

Faridi²,

Faisal³

2020

JAFEB

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This paper applies the Data Envelopment Analysis (DEA) to compute the managerial efficiency of 30 insurance companies listed on the Saudi stock exchange for the duration of four years from 2015 to 2018. The companies taken as a sample of study included both conventional and Takaful insurance companies. The insurance sector of KSA is one of the largest sectors in the country, contributing a substantial percentage in the non-oil economy. Efficiency measurement and evaluation will provide a venue to introspect and benchmark frontiers to the sector. In the present study, we have utilized the basic Banker Charnes Cooper and Charnes Copper Rhodes models of DEA. Two inputs, namely, general & administrative expenses and policy & acquisition costs, and two outputs (Net premium earned and Investment Income & other incomes) were taken for efficiency calculations. The final outcomes of the study reveal that a good number of insurance companies operating in KSA are found to be efficient on managerial efficiency scale. Three firms remain the leader on the frontier of the managerial efficiency. And no company found with zero (0) efficiency or a negative efficiency. It is expected that the outcome of the study will provide benchmarks to managers and a road map to further improvement.

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“…The object of risk-pooling being to pay claims seems questionable. Other more probable objectives from the viewpoint of insurers and their investors seem to be profits, goodwill and diversification (Rao, et al, 2010). Also policyholders and regulators desire profit and they probably consider safety to be more important.…”

Section: Output Proxies: Reserves and Claimsmentioning

confidence: 99%

Life insurance company efficiency: best method and proxies

Wise¹

2018

Insurance Markets and Companies

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Life insurance is a very important segment of the economy of most countries as demonstrated by the investments, premium revenue and numbers employed. Hence, it is paramount to determine accurately how well life insurance companies (LICs) perform and how viable they are for the benefit of both other industries and national economies.Three papers that investigate LIC efficiency directly analyze how efficiency affects LIC profits. One critical feature is that they show that the inefficiency of LICs can greatly affect their (financial) outcome and ultimately their survivorship. Thus, said research clearly indicates that life insurer efficiency is a crucial area to investigate and assess and that it could greatly enhance the ability to properly monitor and inspect the life insurers.This article co-ordinates information regarding life insurance efficiency studies to help researchers learn which approaches, methods and output/input proxies to use. While some papers do so for some of the aspects that are important and necessary for life insurance efficiency studies, this is the first to deal with said aspects together. More specifically, this paper especially considers and evaluates the different methods and output proxies used in life insurance efficiency studies, as they seem to be the elements where the most disagreement exists between researchers. In addition, this article is unique in examining how input (proxy) prices are used in life insurance efficiency studies.

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Analysis of managerial efficiency in insurance sector in the UAE: an emerging economy

Cited by 10 publications

References 22 publications

Efficiency drivers of insurers in GCC: an analysis incorporating company-specific and external environmental variables

Efficiency drivers of insurers in GCC: an analysis incorporating company-specific and external environmental variables

Measuring the Managerial Efficiency of Insurance Companies in Saudi Arabia: A Data Envelopment Analysis Approach

Life insurance company efficiency: best method and proxies

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