Title: Public sector general insurance companies in India: potential gains from merger

Authors: Ram Pratap Sinha

Addresses: Government College of Engineering and Leather Technology, LB-11, Sector-III, Salt Lake, Kolkata-700098, India

Abstract: The Indian general insurance industry underwent major structural changes in terms of competition, economies of scale and scope and pricing during the last 15 years as a result of the deregulation of the insurance market since 1999. The entry of the new general insurance companies resulted in a decline in the market share of the public sector general insurance companies to a level of 55%. Against this backdrop, the present study evaluates the potential gains from merger of public sector general insurance companies using data envelopment analysis for the years 2012-2013 and 2013-2014. The study computes overall efficiency gains and decomposes the same into learning, scale and scope effects. The results reveal that the overall potential gain from the merger is negative for both the years due to the presence of strongly negative scale effect.

Keywords: institutional roles; external corporate control; merger; potential gains; pure gains; learning gains; firm performance; general insurance; data envelopment analysis; DEA; non-parametric approach.

DOI: 10.1504/IJBG.2017.085106

International Journal of Business and Globalisation, 2017 Vol.19 No.1, pp.79 - 92

Received: 27 Jul 2015
Accepted: 19 Jan 2016

Published online: 12 Jul 2017 *

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