A Comparative Study of Cost Efficiency of Life Insurance Companies in India

Abstract

The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. The objectives of the study are to compare international life insurance density and penetration and to evaluate the cost efficiency of life insurance companies operating in India for the period 2000-01 to 2009-10.Secondary data is used for this research. All private and public sector life insurance companies in India from 2000-01 to 2009-10 were selected for the study. The present study involves calculation of cost efficiency score of life insurance sector in India with the used of Data Envelopment Analysis (DEA). Life Insurance Corporation of India has consistently secured a cost efficiency score of 1 in all the years from 2000-01 to 2009-10 and scored the highest rank for all the years under study. Thus Life Insurance Corporation of India has consistently been a cost efficient organization. While in the case of the private life insurance companies, the cost efficiency score has been inconsistent.