DEA: Efficiency Assessment of Risk Management Practices in Insurance Companies

Here’s an example of a decision-making problem related to education: Efficiency Assessment of Risk Management Practices in Insurance Companies

Using DEA, the efficiency of each DMU in risk management practices can be evaluated. The analysis involves comparing the input-output relationship of each DMU to determine their relative efficiency. The DEA model calculates efficiency scores and identifies the most efficient DMUs, which serve as benchmarks for the less efficient ones.

 The efficiency assessment helps insurance companies identify areas of improvement in risk management practices and learn from the best-performing companies. It enables them to optimize the utilization of inputs to achieve desired outputs and enhance overall risk management effectiveness.

1. Objective

Efficiency Assessment of Risk Management Practices in Insurance Companies

2. Determining the model, Inputs, Outputs & DMUs

In this step, the model, Inputs, Outputs & DMUs are determined:

model:  DEA
Number of inputs: 3
Number of outputs: 3
Number of DMUs: 30

Inputs names:

Financial Resources (in USD)
Skilled Workforce (number of employees)
Information Systems (technology infrastructure)

Outputs:

Risk Mitigation Effectiveness
Financial Performance (in USD)
Customer Satisfaction

DMUs names:

SecureGuard Insurance
Sentinel Assurance
ShieldPro Insurance
Trustworth Insurance
ReliableRisk Assurance
SureSafe Insurance
Protection Plus
SafeHarbor Assurance
SecureInsure
AssureGuard Insurance
SafetyNet Assurance
Coverage Solutions
RiskShield Insurance
GuardianCover Assurance
Dependable Insurance
DefendSure Assurance
ReliableCoverage
SecureLife Insurance
ShieldMaster Assurance
TrustGuard Insurance
AssurancePro
SafetyFirst Insurance
SecureRisk Assurance
AssureNet Insurance
Protection Partner
SureCover Assurance
ReliableInsure
SecureBond Insurance
GuardianAssure Assurance
DependableCoverage

3. Create matrix

After determining Inputs, Outputs & DMUs, the decision matrix is formed. The table below shows the decision matrix.

3. Run software:

The data is placed in the software and the software is executed. The following video shows the implementation of the software:

4. Get Result

In this step, you can see the result of the report. The report is presented in three types of formats: online report, Excel and Word. You can view or download three types of formats below.