Assessing the Effectiveness of Insurance Companies in Terms of Human, Technical and Financial Dimensions in Order to Empower the Insurance Industry

اقتصاد پولی مالی

Article 7, Volume 26, Issue 17, September 2019, Pages 167-192   

Document Type: پژوهشی

DOI: 10.22067/pm.v26i18.65913

Authors

azam ghezelbash^* ; abbas ali lotfi

Ferdowsi University of Mashhad

Abstract

Introduction
Financial markets have a key role to play in economic growth and the insurance industry, which is a financial institution, can be a factor behind economic growth. On the other hand, efficiency and efficiency in the insurance industry is also very important. The insurance industry of Iran is the forty-sixth in the world with 0.09% of the total production insurance premiums. Turkey's neighboring country, rankis 34th. Iran's premium per capita is $ 50 against the world average of $ 608, which is 76 points away from countries such as however,Turkey, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. To stay competitive with other units, you had to increase your performance to an acceptable level over time. The first stepis to improving the activity is to be aware of the current activity level. This recognition helps each unit become aware of its current situation and, given the current situation, can adopt a better and acceptable level of activity and efficiency with a proper approach.
Theoretical framework
Efficiency is the achievement of an entity at the optimal level of production or the extent to which a firm has access to the optimal level of production with respect to available inputs. Performance, in other words, implies how well an organization has used its resources to produce the best performance over time. Performance calculation is defined by the expected or standard output value by using this ratio: Real output / Expected output = efficiency .
The concept of efficiency is often confused with the words "productivity" and "effectiveness". Effectiveness shows the consistency of an organization's activities with the goals set for it, and productivity is actually a combination of effectiveness and efficiency because effectiveness is related to performance and efficiency using resources.
 Methodology
 Data Envelopment Analysis (DEA) is a non-parametric method for calculating performance. This method was introduced for the first time, inspired by Farrell (1957) by Charles, Cooper and Rhodes (CCR) in 1978. In this study, by using the maximization approach of products, we examine the efficiency of insurance companies. The population studied in this study is active insurance companies in the country and the relevant statistics were compiled for the years 2007-9. DEA 2.1, Excel 2010, Eviews7 software are also used to calculate variables and estimate the pattern.
 Results & Discussion
 The results of this study show that among the most effective companies, the Iranian insurance company - with a low-sensitivity input-is considered to be the best company in terms of resource strength, although it is questioned due to the lack of sensitivity to the output indicators. Hafez also has a good low-pass output, but it is also weak due to lack of sensitivity to inputs or resources. Among the insurers that did not have full performance-of course, due to Indicators of input and output of the model - the low sensitivity of the Parsian insurance company to the 3 input indicators, shows the effective and high role of the company to the input sources. Also, the company is sensitive to two output factors, which indicates the proportion between input factors And output. Insurance companies from Sri Lanka, Sina, Development, and Nation are also ranked among the best insurance companies in terms of resource utilization.
Conclusions & Suggestions
Most insurance companies in Iran were low or insensitive to wage and education factors, so proper policy making should be done in the field of human resources empowerment in this industry. Regarding the financial dimension, it can be said that although insurance companies have a high sensitivity to financial factors such as fixed assets and premiums, the weaknesses of these companies in factors such as profitability and investment income show that these companies The financial dimension should also be strengthened, which requires special planning.
 

Keywords

Human Efficiency; Financial Performance; Insurance Industry; Data Envelopment Analysis (DEA)

References

[1] Bardbar, Gh. Mansouri, H. and Jamali, R. (2008). The Study of the Relationship between Organizational Culture and Human Resources Productivity in the Insurance Industry (According to a Survey of Highly-Managed Insurance Companies of Yazd City). Insurance Industry Quarterly, Year Twenty Second, No. 4, pp. 179-207. (in Persian)

[2] Coeli, a. (1996). Data Envelopment Analysis and Productivity Analysis: A review of the Options, The Economic Journal, vol.109, No. 456. Pp.458-462.

[3] Charans, A, Cooper, WW & Rhodes, E 1978, 'Measuring the efficiency of decision makingunits',European Journal of Operational Research, vol. 2,pp. 429-44.

[4] Chuan Hu,W, Lai, M-Ch & Huang H-Ch 2009,' Rating the relative efficiency of financial holding companies in an emerging economy: a multiple DEA approach',Expert Systems with Applicationsvol. 36, pp. 5592–9.

[5] Dobson, AM & Waters, M. (1989). Changing culture: new organizational approaches, Institute of Personnel Management.

[6] Emami Meybodi, Ali (2000). Principles of Measuring Productivity and Productivity, Institute for Business Studies and Research.

[7] Ghobadian, A, Speller, S & Jones, M. (1994). 'Service quality: concept and models', International Journal of Quality and Reliability Management, vol. 11, no. 9, pp. 43-66.. (in Persian)

[8] Hamphrey, John and Hobbes, Faya, Knowledge Translation, Hoor Dakht and Khalili Shourin, Sohrab (1997). Productivity and Benefits, Tehran, Firoozeh Publications

[9] Haghighi, M., Mazlomi, N. and Akbari, M. (2007). Comparison of the Quality of Public and Private Company Services of the Insurance Industry in Iran. Insurance Industry, Quarterly Journal of the Year, 23, pp. 47-65. (in Persian)

[10] Hajjarian, Masoud. (2003). An overview of the insurance industry in the world and Iran. (in Persian)

[11] Hemmati, A. Bagherzadeh, H. and Salimi, A. (2007). Review of Technical Efficiency and Saving to the scale of production of Iranian state insurance companies during the years 1991 to 2005, using the data envelopment analysis method, Insurance Industry Quarterly, Twenty-second year, pages 57 to 85. (in Persian)

[12] Mehregan, Mohammad Reza (2004). Evaluation of the Efficiency of Airline Travel Agents Using Data Envelopment Analysis Model, Journal of Management Knowledge, Volume 17, Number 4. (in Persian)

[13] Mehregan; Mohammad Reza (2004). Quantitative Models in Organizational Performance Evaluation, Faculty of Management, University of Tehran. (in Persian)

[14] Shah Tahmasebi, Ismail and Hosseini, Khodadad and Adel Azar (2011). Measuring the Competitive Costuming Efficiency of Iran Based on the Quantitative Model of Diamond-Gun Porter Compared to Selected Countries - DEA Approach, Journal of Commercial Management, Volume 3, Issue 9, Payare 1390 Rials, pp. 91-112.. (in Persian)

[15] Sueyoshi, T & Goto, M. (2009). 'Can R&D expenditure avoid corporate bankruptcy? comparison between Japanese machinery and electric equipment industries using DEA–discriminante analysis',European Journal ofOperational Research, vol. 196, pp. 289–311.

[16] Sigma 2006, 'World insurance in 2006', Swiss Reinsurance Company, no.4.

[17] www.Mellatinsurance.com