Analyzing efficiency in the Chinese life insurance industry

Abstract

Purpose – The purpose of this paper is to examine the efficiencies of China's foreign and domestic life insurance providers and to explore the relationship between ownership structure and the efficiencies of insurers while taking into consideration other firm attributes.Design/methodology/approach – The data envelopment analysis (DEA) method is used to estimate the efficiencies of the insurers based on a panel data between 1999 and 2004.Findings – The results indicate that the average efficiency scores for all the insurers are cyclical. Both technical and scale efficiency reached their peaks in 1999 and 2000 and gradually reduced for the rest of the period under examination until 2004 when average efficiency were improved again. The Tobit regression results show that the insurers' market power, the distribution channels used and the ownership structures may be attributed to the variation in the efficiencies.Research limitations/implications – Based on the research findings and the discussion, the study pr...