Efficiency and productivity of Islamic life insurance companies in Indonesia: a DEA-Malmquist approach

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Authors: Novi Puspitasari, Al Fatih Gessan Pananjung Aryasantana, Windy Sri Anisa Utami, Ana Mufidah, Dhealelia Munandari
Cited by: 1
References: 49

Abstract

Purpose This study aims to analyze the efficiency and productivity of Islamic life insurance companies (ILICs) in Indonesia, with the goal of supporting company sustainability following financial pressure during the COVID-19 pandemic. Design/methodology/approach This study comprises 90 observations from 15 ILICs, spanning the period from 2016 to 2021. The efficiency and productivity levels are measured using the Data Envelopment Analysis (DEA)-Malmquist Productivity Index (MPI). This research used an intermediation approach and input-oriented assumptions with the constant return to scale model. The input variables are premiums, total assets, operating expenses, and claim expenses, while the output variables are tabarru’ funds and investment income. Findings The results showed that only one out of four full-fledged and two out of 11 window businesses of ILICs have a 100% efficiency. It means that most ILICs in Indonesia were inefficient from 2016 to 2021. Meanwhile, only an Islamic windows business was declared productive. This indicates that the Islamic life insurance industry has experienced a decrease in productivity. Practical implications This research offers benefits to company managers, particularly in terms of efficiency and productivity, by informing their strategies and policies aimed at maintaining and improving both efficiency and productivity. Additionally, it provides the government with information to inform the development of laws that can enhance the effectiveness and productivity of ILICs. Originality/value This research fills the gap in the limited research that analyzes the level of efficiency and Productivity of Islamic Life Insurance companies using the DEA-MPI approach on a country-scale sample during and after the COVID-19 pandemic.

Fields of Study & Subjects

Insurance and Financial Risk Management Islamic Finance and Banking Studies Efficiency Analysis Using DEA

Publication details

Journal / source
Journal of Islamic accounting and business research
Publisher
Emerald
Pages
1–24
Publication date
15 January 2026
Language
EN