Distribution Systems and Efficiency of Life Insurers in Korea
Keywords:Data Envelopment Analysis, Efficiency, Distribution Systems, Insurance Companies
This study investigates the technical efficiencies of all life insurance companies in Korea using data environment analysis (DEA) for the sample of 2006 – 2017. During the sample period studied, new life policy sales by cyber marketing and traditional face-to-face sales have significantly increased and sales by other distribution methods have parred or decreased. The estimates of average technical efficiency measures of Korean life insurers are about 18 percent higher than those of foreign life insurers. Among competing regression models, a random effects model is found to be an appropriate model and shows that cyber marketing and tele-marketing have a statistically significant positive impact on insurers’ efficiency, while there is a statistically significant negative relationship between the capital input and the efficiency. The findings of this suggest that insurers should strive to increase their operational efficiency by reevaluating and restructuring their distribution channels.