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Journal of Humanities, Arts and Social Science

ISSN Online: 2576-0548 ISSN Print: 2576-0556 CODEN: JHASAY
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ArticleOpen Access http://dx.doi.org/10.26855/jhass.2022.12.036

An Empirical Analysis of Small and Medium-sized China’s Insurance Industry's Core Competitiveness by Three-stage DEA Method

Jiayan Zhu1,*, Guohua Shu2

1China Merchants Fund Management Co., LTD, China. 

2Beijing Actual Combat Elite Enterprise Planning Co. LTD, China.

*Corresponding author: Jiayan Zhu

Published: January 15,2023

Abstract

Great achievements have been seen in China’s insurance industry in the past 20 years, however, inefficiency problems were prevailing as many insurance company only pursuing the expansion of the quantity, but not the increase of their key competitiveness. How to improve the core competitiveness of China's insurance industry, especially the efficiency of Chinese-funded insurance companies, has always been an important issue that the Chinese government, regulators and insurance institutions have been paying attention to and exploring for a long time. This thesis uses the most advanced efficiency evaluation model——three-stage DEA method and a samples of 43 property insurance companies and 53 life insurance companies to calculate the technical efficiency, pure technical efficiency and scale efficiency from 2017 to 2020. The research results show that China’s insurance industry has high technical efficiency and pure technical efficiency, while its scale efficiency is low and its scale is still in an expanding stage from 2017 to 2020. In order to compete with foreign insurance companies, Chinese insurance companies must upgrade their key competitiveness and pure technical efficiency as soon as possible. Through more rational allocation of resources and more refined management, China's insurance industry can achieve its development goals. This thesis uses three-stage DEA method and a samples of 41 small and medium-sized insurance companies in China from 2017 to 2020, to analysis the effectiveness evaluation. According to Empirical research, the main reason for the weak core competitiveness of Chinese small and mediumsized insurance companies is the imbalance of inputs and outputs. Therefore, through rational allocation of resources, optimization of business strategies, and control of costs, the efficiency of companies can be improved. By studying the factors affecting the efficiency of Chinese insurance companies, the conclusion shows that the expansion of asset size will significantly increase the technical efficiency and scale efficiency of life insurance companies and property insurance companies. Moreover, all efficiency of foreign property insurance companies outperform Chinese-funded ones, while technical efficiency of Chinese-funded life insurance companies outperform foreign ones.

Keywords

Three-stage DEA, insurance industry, efficiency, China

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How to cite this paper

An Empirical Analysis of Small and Medium-sized China’s Insurance Industry's Core Competitiveness by Three-stage DEA Method

How to cite this paper: Jiayan Zhu, Guohua Shu. (2022) An Empirical Analysis of Small and Medium-sized China’s Insurance Industry's Core Competitiveness by Three-stage DEA MethodJournal of Humanities, Arts and Social Science6(4), 752-762.

DOI: http://dx.doi.org/10.26855/jhass.2022.12.036