A survey of data envelopment analysis applications in the insurance industry 1993-2018

Recently in the insurance sector, efficiency measurement of insurance firms has attracted great interest from investors, financial market analysts, insurance regulators, and researchers alike. Among several performance assessment approaches, Data Envelopment Analysis (DEA) has become one of the tools that have been commonly adopted to evaluate firms in various fields. Given the increasing interest in applying DEA to assessing relative efficiency or performance of insurance firms and that there has been a growing body of literature on DEA applications in the insurance industry since the last comprehensive published review in the field (i.e., Cummins and Weiss, 2013), an updated survey of DEA applications focusing on the insurance industry is necessary. In this study, we review and analyze 132 DEA application studies in the insurance industry published from 1993 through July 2018, covering both applications and methodologies. Regarding the applications, we show that the impact of recent changes such as Insurtechs, market transparency, and micro-insurance institutions on the efficiency of insurance firms has not yet been touched. As to methodologies, we pinpoint that the newly-developed DEA approaches such as shared resources dynamic network DEA, modified directional distance function, satisficing DEA, and fuzzy DEA lack in the extant literature. Through the analyses, we highlight the existing gaps in the DEA applications in the insurance industry for future research. (C) 2019 Elsevier B.V. All rights reserved.