Measurement of damage to scale based on data envelopment analysis: A case study in Saman insurance company

Insurance industry is one of the most important factors for the economic development of the countries. For example, insurance industry can be important for the stability of financial systems mainly because they are large investors in financial markets, because there are growing links between insurers and banks and because insurers are safeguarding the financial stability of households and firms by insuring their risks. Data Envelopment Analysis (DEA) has been used as a powerful tool for the efficiency assessment of the different organizations, such as insurance industries, hospitals, schools and etc. This paper focuses on evaluation the insurance companies and explores a use of DEA to measure the insurers risk in these companies. For this purpose, we use the dataset of the car insurance policies of Saman insurance company during the years 2018-2019 and measure the Returns to Scale (RTS) for desirable outputs and Damages to Scale (DTS) for undesirable outputs.