Efficiency of Life insurance Companies Operating in Punjab

The issue of efficiency is the key concern in the insurance sector. Efficiency helps to identify the inefficient and efficient insurers in the market to improve competition, profitability and confidence of the policyholders and the way to improve the efficiency of the life insurer. The present study is an attempt to determine the efficiency of life insurance companies and also to give the overview of life insurance business. Most of the studies have been done at India level and no study could be found that determines the efficiency at the state level. So, in this study an effort has been made to get an insight into the level of efficiency, at which the life insurance companies are operating, with special reference to the Punjab State. The sample for the study includes all the 13 life insurance companies registered till the year 2003. Data pertaining to seven financial years i.e. from 2006-07 to 2012-13 has been taken for the analysis. With the help of Data envelopment analysis, a non parametric technique, technical efficiency of life insurance companies has been determined. Results of the study found that LIC is found to be efficient in all the years, similarly in case of private life insurance companies Aviva and SBI were found to be efficient in the first four years of the study period. In Punjab, the life insurance business is operating at an average technical efficiency of 55.0 %, pure technical efficiency 67.9 %, scale efficiency of 80.5 %.