DETERMINANT RATIO AND INTERNAL FACTOR TOWARD EFFICIENCY OF CONVENTIONAL INSURANCES IN INDONESIA

Abstract

Conventional insurance is the important financial service in providing individuals and the economy as the whole number. In the factor of increasing the communities, family, individuals, mobility of the population and urbanization, life insurances taking the important role for family, individuals and institutions to manage their risk. Another thing is insurance product teaching long-term saving to the people. This research aimed to empirically examine the determinants and efficiency analysis of conventional insurances institution in Indonesia in the time horizon of 2016 to 2019. This research uses time series and quarterly data of conventional insurances institution in Indonesia. The study is processed and analysed quantitatively by using panel data regression and Data Envelopment Analysis. The research reveals that the equity to total asset, return on equity, claims, company age and reinsurances significantly affect efficiency as much as 45.4%. In terms of variables, company age, claims, and return on equity have negative and significant effect towards efficiency, while reinsurances and equity to total asset have positive and significant effect towards efficiency. In addition, the result of data envelopment analysis which is used to measure efficiency indicates that Asuransi Multi Artha Guna Tbk is the most efficient conventional insurances with average efficiency score of 88% along three years of observation. The least efficient fund resulted throughout the study is Asuransi Bina Dana Artha Tbk with 52% average efficiency score. Lastly, the overall average technical efficiency score of all samples examined is 61%.