Financial assessment of private and public insurance companies using Collaborative Interoperability and Shannon Entropy

Subject Areas : Financial engineering

Sepideh pourazad ¹ , elaheh khamseh ² , Shadi Shahverdiani ³ , mahnaz Ahadzadeh Namin ⁴

1 - Department of management, Shahre Qods branch, Islamic Azad University, Tehran, Iran
2 - Department of Mathematics, Shahr-e-Qods branch, Islamic Azad University, Tehran, Iran
3 - هیات علمی دانشگاه آزاد اسلامی واحد شهرقدس
4 - Department of Mathematics, Shahr-e-Qods branch, Islamic Azad university, Tehran, Iran

Received: 2018-01-22 Accepted : 2018-05-24 Published : 2018-09-23

Keywords: Ranking, Shannon Entropy, cross-efficiency, Private and public insurance companies,

Abstract :

The insurance industry in Iran is growing, despite its long history of its presence in the Iranian economic market, has not yet been able to find a suitable penetration factor in the market.On the other hand, the increase of private companies and the increase of competition along with the unfavorable economic conditions of private sector actors in the industry and services sectors and the reduction of the share of insurance from the Iranian family of portfolios, due to other existing costs, made it harder for the insurance industry to work.In this paper, we will use the cross-over efficiency method in DEA based on the Shannon entropy, recently proposed by Sung and Liu (2016), to evaluate insurance companies in Iran. First, through interviews with experts in this field, the most important indicators of financial efficiency assessment were identified, which included 6 indicators. In the next step, in order to evaluate performance and ranking in the statistical society, 20 private and public insurance companies use cross-efficiency integration model and Shannon entropy. The ranking of insurance companies in Iran for the three consecutive years of 1393 to 1395. The results of the research indicate a complete ranking of insurance companies in Iran using the model presented in this paper