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Evaluating the Operational Efficiency of Life Insurance Companies in Taiwan– An Application of the Dynamic Network SBM Model
- Source :
- Applied Economics and Finance. 4
- Publication Year :
- 2016
- Publisher :
- Redfame Publishing, 2016.
-
Abstract
- Using a Dynamic Network Slack-based Measurement model (Tone & Tsutsui, 2014), this study evaluated the operational efficiency of life insurance firms in Taiwan from 2006 to 2013. In contrast to previous research, we incorporated assets and liabilities management into the model and compared them against optimal efficiency values in order to determine whether firms are earning maximizing profit while ensuring long-term solvency. The life insurance industry in Taiwan has matured. We found that market competitiveness depends on firms size and business model. Financial holdings companies and large corporations are performing strongly, while small local firms and foreign-owned firms scored poorly in technical efficiency. Economies of scale contribute to the business performance of life insurance firms. Life insurance companies that had merged with or been acquired by financial holdings firms showed notable improvement in efficiency. However, change in term efficiency is a warning signal in long-term business performance of life insurance firms. Lastly, most companies achieved optimal carry-over efficiency, indicating that they place considerable emphasis on managing assets and liabilities in order to ensure future solvency.
- Subjects :
- Finance
Solvency
021103 operations research
Dynamic network analysis
business.industry
Immunology
0211 other engineering and technologies
010103 numerical & computational mathematics
02 engineering and technology
Business model
01 natural sciences
Profit (economics)
Economies of scale
Life insurance
Economics
Operational efficiency
0101 mathematics
business
Subjects
Details
- ISSN :
- 23327308 and 23327294
- Volume :
- 4
- Database :
- OpenAIRE
- Journal :
- Applied Economics and Finance
- Accession number :
- edsair.doi...........d93897e228a242adca34a1b159f06eaf