Measuring Efficiency of Life Insurance Instution in Indonesia: Data Envelopment Analysis Approach
Keywords:Islamic Insurance, Efficiency, DEA
AbstractThis study aims to measure the level of efficiency of the life insurance industry in Indonesia. The calculation of the efficiency level in this study is relative, not absolute. The approach used is Data Envelopment Analysis (DEA). There are 8 research objects: Prudential, BNI Life, PaninDai-IchiLife, Asuransi Jiwasraya and Life Insurance Adisaranan Wanaartha, Takaful Takaful Insurance, Amanahjiwa Giri sharia insurance and Al-Amin sharia life insurance. This study consists of three input variables (cost of Commissive (X1), Operational Cost (X2), Total Equity (X3) and 2 output variables (Premium) (Y1) and Investment Revenue (Y2)). The results explain that there are 15 perfectly efficient DMUs (100%). And an inefficient of 24 DMU, consisting of 7 DMU conditions IRS and 17 DMU with DRS conditions. Of all the DMU observed, Prudential insurance is a life insurance company that is able to maintain its gradual efficiency level from 2013 to 2016 when compared to other life insurance in this observation. In general, the main factor inefficiency of life insurance industry in Indonesia (in observation) from 2012 to 2016 is from the output side. To be more efficient then life insurance companies should increase the value of premiums by 91% and investment income of 8%.
Ascarya. 2009. Effeciency Analysis of Conventional and Islamic Bank in Indonesia using Data Envelopment Analysis (DEA). Center for Banking education and Studies. Bank Indonesia.
Adu, Kwadjo Ansah. Charles Andoh and Joshua Abor (2012). Evaluating the cost efficiency of Insurance companies in Ghana. The Journal of risk Finance Vol .13 No 1 2012 pp 61-76.
Al amri, K (2015,February 9). Takaful Insurance Effeciency in The GCC Counries. Journal Sultan Qaboos University, Vol 31 No 3.2015 pp.344-353.
Bawa, Sumninder kaur and Nidhi Bhagat (2015). Effeciency of life Insurance Companies Operating in Punjab. Pacific Business Review International Volume 7, Issue 9, March 2015.
Dewi, Fitri Sartina, (2017, 13 Februari) http://finansial.bisnis.com/read/20170213/89/628536/industri-keuangan-non-bank-total-aset-sepanjang-2016-capai-rp1.907-triliun-
Farrel,M (1957). The Measurement of Productive Efficency.Jurnal of the Royal Statistical Society, Vol.120, 20.3.
Ghimire, Rabindra (2016). Efficiency of Nepalese life Insurance Companies Using DEA Approach. SSN 2349-2325 (Online); DOI: 10.16962/EAPJFRM/issn. 2349-2325/2016; Volume 7 Issue 4 (2016).
Gitman, Lawrnece. 2013. Priciples of managerial Finance. Emgland :Pearson Education.
Hu, Xiaoling. Chuizhen Zhang. Jin Li Hu. Nong Zhu (2009). Analyzing efficiency in the Chinesse life insurance industry. Management Research News, Vol. 32 Issue: 10, pp.905-920.
Hewlitt, Allison. 1998. Efficiency in the Canadian Insurance Industry: A data Envelopment Analysis Approach. Departement of Mecahanical And Industrial Enginering University of Toronto.
Karim, Consulting Indonesia, Islamic Insurance Outlook 20117.
Karim, A (2007). Ekonomi Mikro Islam. Jakarta: Raja Grafindo Persada
KKhan. Atiquzzafar dan uzma Noree, 2014 EFFICIENCY MEASURE OF INSURANCE VS TAKAFUL FIRMS USING DEA CASE PAKISTAN, Islamic Economic Studies Vol. 22, No. 1, May, 2014 (139-158).
Khan, Atiquzzafa. Uzma Noreen. (2014). Effeciency Measure of Insurance v/s Takaful firms using DEA approach :A case of Pakistan. Islamic economic Studies .vol 22,no 1, May 2014.
Publikasi Otoritas Jasa keuangan (OJK) 2016. Statistik Pengansuransian Indoenesia 2015. Jakarta:Otoritas jasa Keuangan
Salinan .POJK05. 2016 Undang-undang Pengansuransian.
Saad, Norma Md. M Shabri Abd Majid. Rosyln Mohd Yusof (2006). Measuring Effeciency of Insurance and Takaful Companies in Malaysia Using DEA. international association for islamic economics Review of Islamic Economics, Vol. 10, No. 2, 2006, pp.5–26
Global Review of Islamic Economics and Business is licensed under a
Creative Commons Attribution-ShareAlike 4.0 International License