Examples of the use of Data Envelopment Analysis (DEA) to assess the financial effectiveness of insurance companies

Smętek, Karolina; Zawadzka, Danuta; Strzelecka, Agnieszka

doi:10.1016/j.procs.2022.09.454

Cited by 11 publications

(4 citation statements)

References 12 publications

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“…According (Smęteka, Zawadzkaa, & Strzeleckaa, 2022) In a market economy, it is important to assess the financial efficiency of businesses. For insurance companies, the level of results achieved and financial efficiency are influenced by the scope of the insurance business and the groups of risks insured.…”

Section: Discussionmentioning

confidence: 99%

The relevance of financial analysis in performance assessment: the case of an Algerian insurance company

Hizia

2023

SEC

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Insurance companies are in a special position because of their ability to assess and mitigate the risks faced by their customers. They are susceptible to a series of uncertainties, given their role in protecting individuals, professionals, and businesses. By providing comprehensive coverage and assistance in the event of unforeseen events such as natural disasters, accidents, or loss of life, insurance companies play a vital role in providing financial assistance and mitigating the adverse effects of such events. Insurance companies play a vital role in the economy by providing financial assistance and mitigating the negative effects of unforeseen events. Financial performance indicators, such as financial ratio analysis to measure the health of the insurance company, are essential tools for assessing the financial stability and growth potential of insurance companies. This study found that SAA, the leader of the Algerian insurance market, had good financial performance from 2019 to 2021. Evaluating the financial performance of an insurance company was the objective of this research, with a particular focus on the case of SAAs from 2019 to 2021 by performing an analysis using the ratio method. The case of this study focused on the preparation of financial statements and the presentation of financial performance indicators of SAA, which is the leader of the Algerian insurance market. The results reveal that SAA demonstrated good financial performance over the three-year study period.SAA’s financial analysis indicates that the company’s financial structure is solid. This research contributes to the field of financial analysis, highlighting the advantages of using financial ratios to assess the financial performance of insurance companies.

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Section: Discussionmentioning

confidence: 99%

The relevance of financial analysis in performance assessment: the case of an Algerian insurance company

Hizia

2023

SEC

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“…The literature points out that it is worth using the DEA research technique; it is the advisable alternative for parametric analysis. Numerous authors recommend the DEA methodology to assess the efficiency of socio-political policies [66][67][68][69][70][71]. The advantages of the data envelopment method include that it does not require specification or knowledge of variable weights.…”

Section: Methods Of Data Analysismentioning

confidence: 99%

Panel Data Analysis of Subjective Well-Being in European Countries in the Years 2013–2022

Dziechciarz

2024

Sustainability

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The background of the study is the analysis of social expenditure efficiency in European countries over time. Terminological considerations leading from hedonism and eudaimonism to the concept of subjectively perceived well-being and the Easterlin paradox are necessary to understand the differences in changes in the level of well-being among countries and over time. The purpose of the study is to analyse citizens’ declarations on subjective well-being as an indicator of the efficiency of social policy. The methods used for statistical analysis are conventional and dynamic data envelopment analysis (DEA) techniques. The EU-SILC and OurWorldInData.org data analysed with DEA provided the main results. The study identified significant fluctuations in subjective well-being, with a clear long-term upward trend. Among the surveyed countries, there are those where progress is due to internal factors, while in the Mediterranean countries, external factors predominate. The level of the estimated DEA efficiency indicators (TC and EC) indicate the improvement in input efficiency in a substantive number of countries, e.g., Estonia and Cyprus, along with persistently low indicator values in some member states, Italy and Luxemburg. In conclusion, the author indicated areas in individual countries where attempts to improve social policy are needed to raise and maintain desirable levels of subjective well-being.

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“…Moreover, data envelopment analysis (DEA) has been most commonly used for insurance companies' efficiency assessment. DEA methodology was initially mentioned in 1978 by Charnes et al (Smętek et al 2022) and it can be defined as a mathematical, non-parametric approach, which is used to estimate the DMU (decision-making unit) performance (Ðurić et al 2020). As it was mentioned in Abdin et al (2022), efficiency can be measured by the input-oriented approach and the output-oriented approach.…”

Section: Literature Reviewmentioning

confidence: 99%

Investigating the Efficiency of Insurance Companies in a Developing Country: A Data Envelopment Analysis Perspective

Fotova Čiković,

Cvetkoska,

Mitreva

2024

Economies

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Insurance companies play a pivotal role in the financial systems of developing countries, wielding substantial influence on systemic financial stability. Thus, understanding their efficiency, performance, and sustainability is paramount for policymakers and stakeholders alike. The aim of this paper is to evaluate the relative efficiency of insurance companies within the North Macedonian market spanning the years 2018 to 2022. Employing the input-oriented BCC DEA model, the study integrates capital and labour as inputs, while assessing risk-pooling/bearing services and intermediate function as outputs. Our findings underscore the fluctuating efficiency levels within North Macedonia’s insurance sector. Notably, the sector exhibited its peak efficiency in 2018 at 83.62%, dipping to its lowest point of 73.81% in 2020. Moreover, discerning between life and non-life insurers, we observe an average relative efficiency of 0.8067 for non-life insurers, contrasted with a higher average efficiency score of 0.9011 for life insurance companies over the examined period. This study contributes significantly on multiple fronts. Firstly, it pioneers empirical investigation of the efficiency on the North Macedonian insurance market, encompassing pre- and post-COVID efficiency metrics. This fills a notable gap in the literature, particularly within the context of emerging European markets. Secondly, our comprehensive approach facilitates a holistic evaluation of the insurance sector’s performance across a five-year span, offering insights into its overarching dynamics and efficacy. Thirdly, the implications of our findings extend to policymakers, regulators, and insurance company management, aiding in informed decision-making and strategic planning.

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Examples of the use of Data Envelopment Analysis (DEA) to assess the financial effectiveness of insurance companies

Cited by 11 publications

References 12 publications

The relevance of financial analysis in performance assessment: the case of an Algerian insurance company

The relevance of financial analysis in performance assessment: the case of an Algerian insurance company

Panel Data Analysis of Subjective Well-Being in European Countries in the Years 2013–2022

Investigating the Efficiency of Insurance Companies in a Developing Country: A Data Envelopment Analysis Perspective

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