ARCHIVES
VOL. 11, ISSUE 3 (2026)
Exploring operational efficiency of indian life insurance sector in the post-reforms era: A data Envelopment Analysis (DEA) approach
Authors
Dr. Mitrendu Narayan Roy
Abstract
The current study evaluates the Overall
Technical Efficiency (OTE) of all the companies in Indian life insurance sector
following the reforms introduced in the sector by the Government of India
following the recommendations proposed by the Malhotra Committee. The OTE of
each Indian life insurance companies in each year during the study period
(2001-02 to 2020-21) has been computed using an input oriented non-allocative
envelopment model developed by Charnes, Cooper and Rhodes (CCR) (1978) taking
into consideration ‘Operating Expenses’ and ‘Commission Expenses’ as input
variables and ‘Investment Income’, ‘Net Premium Earned’ and ‘Benefits Paid’ as
output variables. While by the end of 2022, the total number of life insurance
companies in the sector have become 24, from 2001, they have entered the
industry in different intervals. Hence the number of Decision-Making Units
(DMUs) in each year during the study period varied during the study period. The
data with respect to these input and output variables are collected from the
2014 and 2021 issue of the Handbook on Insurance Statistics issued by the
Insurance Regulatory and Development Authority of India (IRDAI). The data
collected has been deflated using Gross Domestic Product (GDP) deflator to
nullify the effect of inflation and analysed using an excel based mathematical
tool, DEA Frontier. It is observed that in an average the entire industry for
the overall study period has an operational efficiency of 61% with a volatility
of 18.6%. The Life Insurance Corporation of India (LIC), the only public sector
company in the industry has reported efficiency in each year during the study
period. Out of all the private life insurers, SBI Life, ICICI Prudential Life,
IndiaFirst Life, HDFC Life, Canara HSBC OBC Life are marginally inefficient
companies and they have projected operational efficiency in quite a few years
during the study period. Aegon Life was most volatile in terms of their
operational performance. Worst performing private companies in terms of their
operational performances are Exide Life, Future Generali Life, PNB MetLife,
Bharti AXA Life and Edelweiss Tokio Life.
Download
Pages:5-14
How to cite this article:
Dr. Mitrendu Narayan Roy "Exploring operational efficiency of indian life insurance sector in the post-reforms era: A data Envelopment Analysis (DEA) approach". International Journal of Advanced Research and Development, Vol 11, Issue 3, 2026, Pages 5-14
Download Author Certificate
Please enter the email address corresponding to this article submission to download your certificate.