AN EFFICIENCY ANALYSIS OF INDIAN REINSURERS AND GENERAL INSURERS USING DATA ENVELOPMENT ANALYSIS

Abstract

This research investigates the operational and productivity efficiency of Indian general insurers and reinsurers using Data Envelopment Analysis (DEA) and the Malmquist Productivity Index (MPI) over four year from 2020 to 2024 and five-year period from 2019 to 2024 respectively. The study evaluates 27 general insurers and 11 reinsurers, combining both public and private sector entities, to provide a comprehensive picture of performance across the insurance ecosystem.Two DEA models, Constant Returns to Scale (CRS) and Variable Returns to Scale (VRS) were used to measure technical, pure technical, and scale efficiencies. Inputs such as operating expenses and equity were assessed against outputs like net premiums earned and income from investments. The results revealed significant variation in efficiency. Public sector entities like The New India Assurance and GIC Re achieved perfect efficiency scores (1.0) across all years, indicating optimal resource utilization and scale. Conversely, newer private players such as Acko General (mean score 0.152) and Navi General (mean score 0.347) demonstrated considerable inefficiencies, largely due to scale disadvantages and inconsistent operations.The Malmquist Index further revealed that most productivity improvements were driven by technological progress rather than managerial efficiency gains. While firms are investing in innovation, they struggle to translate it into consistent operational performance.This study highlights the need for strategic reforms focused on scale optimization, internal management practices, and customer service infrastructure. The findings offer critical insights for regulators like IRDAI, policymakers, and insurance firms aiming to boost sectoral efficiency, support financial inclusion, and strengthen the resilience of India’s risk transfer mechanisms.