The evolution and determinants of accepted in Tehran stock exchange insurance companies’ Profitability: A DEA-based perspective

Profitability is a crucial indicator of insurance company performance, as it reflects their ability to invest and grow. Supervisors also rely on financial characteristics, including profitability, to determine the viability of insurers. The data envelopment analysis (DEA) method has been widely used to evaluate the performance of insurance companies. However, conventional financial ratios are often lacking in such studies, making DEA an effective alternative for measuring profitability. Given the rapid growth of the insurance industry in Iran, this research aims to examine the profitability of non-life insurance companies in Iran and expand coverage analysis. The study focuses on 18 insurance companies listed on the Tehran Stock Exchange from 2013 to 2014, with complete and available information during the research period. Profitability is measured using DEA, and the Tobit estimator model is used to investigate the impact of company size, company age, and product variety on profitability. The results highlight the importance of properly managing expenses and incomes for insurers. Additionally, the study finds that company size, company age, and product variety do not have a significant relationship with profitability. Insurance companies need to effectively organize their expenses and various types of business to maximize profit ratios. Optimizing cost structures and diversifying business ventures are key strategies for achieving profitability. This research provides insights into insurance company performance, allowing for a better understanding of their relative profitability within the industry and the formulation of targeted strategies. It also aids the government in developing policies that support the industry's growth.