Efficiency of General Insurance in Malaysia Using Stochastic Frontier Analysis
Abstract
General insurance comprises insurance of property against fire and burglary, floods, storms,
earthquakes and so on. The purpose of the current study is to measure the relative efficiency of general
insurance in Malaysia by using SFA for the year 2007 until 2009, consist of 26 general insurance
companies by using the software FRONTIER to obtain the maximum likelihood (ML) and to get the
relative efficiency. The finding showed that Oriental Capital Assurance Bhd (OCA) is at rank 1 for the
three years. The 0.03975 value for the variance gamma ( γ ) parameter in this study is far from one,
suggesting that all of the residual variations are not due to the inefficiency effects, but to random
shocks. It can therefore, be concluded that the technical inefficiency effects associated with the
production of the total profits by the input of the general insurence are very low.
earthquakes and so on. The purpose of the current study is to measure the relative efficiency of general
insurance in Malaysia by using SFA for the year 2007 until 2009, consist of 26 general insurance
companies by using the software FRONTIER to obtain the maximum likelihood (ML) and to get the
relative efficiency. The finding showed that Oriental Capital Assurance Bhd (OCA) is at rank 1 for the
three years. The 0.03975 value for the variance gamma ( γ ) parameter in this study is far from one,
suggesting that all of the residual variations are not due to the inefficiency effects, but to random
shocks. It can therefore, be concluded that the technical inefficiency effects associated with the
production of the total profits by the input of the general insurence are very low.
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PDF (Bahasa Indonesia)DOI: https://doi.org/10.29313/jstat.v11i2.1050
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