A Comparative Analysis of Efficiency of General Insurance Companies in Malaysia And Singapore: Application of DEA and Tobit Analyses

This study aims to measure and compare the efficiency level of the general insurers in Malaysia and Singapore from the year 2017 to 2021, and to identify the key factors affecting the efficiency of the general insurers in the two neighbouring countries. To compute the efficiency scores of each selected general insurer, the Data Envelopment Analysis (DEA) linear programming approach is applied. Two selected input variables are management expenses and total assets, while the two output variables are net insurance premium and investment income. Tobit Regression Analysis is then used to test the significance of each variable used in the study. The DEA results show that the difference between the general efficiency level of the 15 general insurers in Malaysia and Singapore respectively, is not significant. There is only one general insurer in Malaysia which achieves full efficiency from 2017 to 2021, and there are two fully efficient general insurers in Singapore. Management expenses are the only variable that is tested to be statistically significant in all three Tobit models computed. This is backed up with evidence from other literature and professional opinions which imply that management expenses are the key thing to be controlled in terms of efficiency performance for general insurers.