Abstract

This study examined the determinants of efficiency in the insurance companies of Pakistan over the period 2003 to 2007. Data envelopment analysis (DEA) was applied to estimate the efficiency scores of the insurance companies and then the study used regression analysis to analyze the relationship of line of business, size, profitability, investment, claim and financial reforms with the DEA efficiency scores. Moreover, for a more comprehensive analysis, the present study has also divided the sample into life and non-life insurers. In the non-life insurers, it was found out that investment, profitability and financial reforms are positively related whereas, claim was found negatively related with the efficiency scores. In contrast, investment, profitability and financial reforms were found negatively related whereas, claim was found positively related with the efficiency scores of the life insurers.

Key words: Pakistan, determinants, efficiency, life insurers, non-life insurers.