Relative Technical Efficiency of Life Insurance Companies DEA and Interval DEA Methods

Insurance industries in India have taken a huge shape especially after privatization and introduction of Insurance Regulatory & Development Authority (IRDA). It plays an vital role in the growth of financial sector in all developed and developing countries. Insurance may be a sort of risk management and primarily used hedge against the danger of a contingent or uncertain loss. In this paper the author analyses the relative efficiency of life insurance companies in India using DEA and Interval Data Envelopment Approach (Interval DEA). DEA is a non parametric linear programming problem used for measuring the relative efficiency of decision making units (DMU) which utilize several identical inputs to produce a set of identical outputs. Interval DEA model is used in efficiency measurement of the life insurance companies under imprecise inputs and outputs. The empirical results of the conventional DEA models and Interval DEA models are computed to trace the performance of decision making unit at a possibility level.