Determining the efficiency rating and factors for efficiency of life insurance companies in the Philippines using the two stage data envelopment analysis and panel regression from 2005-2009

• Main Authors: Ko, Steven, Magpayo, Carlo, Que, Michael, Tan, John Constantine
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Insurance companies > Philippines; Insurance > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18361
• Institution: De La Salle University

The life insurance industry plays an important role in the financial market of a country by making investments while ensuring that the funds of the insured circulates even after his death through benefit payments. The penetration of the product in the Philippines is generally weak, with only a 5-6% share in the total assets of the financial system, whereas it holds a 30-40% share in developed countries. This research aims to determine the efficient life insurance companies from 2005-2009 in the Philippines, as well as identify what factors affect the efficiency of these companies. The first objective is to inform the general public which insurers they can deposit their hard-earned money with. The second objective will give an idea on what sectors the insurers must improve on to be more efficient. The two-stage data envelopment analysis was used to identify the efficiency ratings of the life insurers while the pooled OLS technique was used to identify the factors that affect efficiency. Since the insurance companies generally earn from production activities and investment activities, models for both activities were used. This research found out that the overall efficient life insurance companies in the country are Generali Pilipinas Life Insurance Company, Inc., Insular Life Assurance Company Ltd., Philam Equitable Life Assurance Co., Philippine AXA Life Insurance Corp., Pru Life Insurance Corporation of UK, Sony Life Insurance Corp., and United Coconut Planters Life Assurance Co. As for factors for improving the production in term of writing more premiums, the DEA sensitivity analysis and pooled OLS found benefit payments as the most statistically significant variable, while the most and only significant variable that affects the capital gains or the investment activities was only total investments.