Measuring the Efficiency of Life Insurance Companies in the ASEAN and MENA Regions: A Data Envelopment Analysis (DEA) Approach, from 2014 to 2023
This research aims to evaluate the efficiency of life insurance companies in the ASEAN and MENA regions from 2014 to 2023 using the Data Envelopment Analysis (DEA) method. Efficiency in the insurance industry is a crucial indicator of a company’s ability to manage resources optimally to generate maximum output, particularly amid global economic challenges, digital transformation, and intense competition. DEA, a non-parametric frontier technique, was chosen as it allows for the assessment of relative efficiency among Decision Making Units (DMUs) by comparing the ratio of multiple inputs and outputs. The study uses three input variables total assets, total equity, and operating expenses and one output variable, namely revenue or premium income.
The research further compares efficiency levels between the ASEAN and MENA regions and investigates the determinants influencing efficiency, including differences between conventional and Islamic insurance models. The findings reveal substantial variation in efficiency levels across firms and countries, under both Constant Return to Scale (CRS) and Variable Return to Scale (VRS) models. While some firms operate efficiently, others show signs of inefficiency, highlighting the need for resource optimization. The results provide strategic insights for regulators and industry stakeholders to improve operational efficiency and enhance the competitiveness of life insurance firms across these regions.
Keywords: Efficiency, Life Insurance, ASEAN, MENA, DEA, CRS, VRS
