Evaluating The Efficiency Of Insurance Companies In Vietnam Using Dea And Truncated Regression

Abstract

Because of the lack of insurance efficiency literature in Vietnam, this study aims to evaluate the efficiency of 30 Vietnamese insurance companies from 2016 to 2021. The efficiency scores are measured by applying the data envelopment analysis in the first stage. In the second stage, truncated regression is employed to identify the relationship between financial factors and efficiency. The results show that the majority of insurers in Vietnam are relatively efficient, but the average efficiency score decreased over the study period. In the BCC model, the factors significantly affecting efficiency are leverage, gross written premium, firm age and size, and life insurance type. All these factors positively affect efficiency except the firm size. In the CRR model, only leverage, firm age, and life insurance type have a significantly positive impact on efficiency. The findings of this study provide insights for policymakers and stakeholders to improve their performance efficiency in the Vietnamese insurance market.