Technical efficiencies of Ghanaian general insurers

The performance or efficiency of every production unit is of paramount importance to management of the units. In management Science, there are two main methods used to measure performance. These are Parametric and non-parametric methods. Data Envelopment Analysis (DEA) is a non-parametric method used in evaluating the relative performance of productions units that use the similar input factors to produce similar outputs. This paper seeks to use DEA to evaluate the relative performance of Ghanaian general insurance companies from the year 2002 to 2007. The study uses Debt capital, Equity capital and Management expenses as inputs that are used by insurers to produce premium, claims and investment income. It was observed that Ghanaian general insurers operated at an average overall efficiency of 68%, technical efficiency of 87% and scale efficiency of 78%. The study also tests hypotheses relating to the roles played by dimension and market share in the efficiency of the Ghanaian general insurance companies. It was observed that Ghanaian general insurers with higher dimension and market shares tend to have higher efficiencies; implying that general insurers could increase their efficiencies by trying to increase among other things thier dimension and market shares.