Ranking of entrepreneur insurance branches based on balanced performance evaluation model (BSC) using TOPSIS technique

Business Management

Financial Orientation

Dissertation for receiving the master's degree "M.A"

Abstract:

Given the very high impact of the insurance industry on the economic growth and development of countries, performance evaluation in insurance companies is very important and since insurance companies are very broad in terms of structure and type of activity, the need to control and evaluate performance in them is doubled. Therefore, evaluating the performance of insurance company branches by checking the quality and performance and comparing them is a step to continuously improve the performance of the branches. Today, the basic issue for evaluating the performance of insurance companies or institutions that have multiple departments and branches is that until now, a comprehensive, reliable and flexible performance evaluation method has not been provided in this regard; Therefore, this research aims to design a model to evaluate the performance of insurance company branches, inspired by the balanced scorecard model, and then to rank insurance company branches. For this purpose, through document study and interviews with experts, experts and managers of the insurance industry, the most effective performance indicators have been identified and generally classified in the form of eleven criteria and 48 indicators in four areas of finance, customer, internal processes and growth and learning. Then, through a questionnaire and a survey of experts, as well as the use of statistical tests with the help of SPSS software, the research hypotheses were tested. The results indicated that the balanced scorecard model and each of the four dimensions of the model have significant importance in the evaluation of entrepreneur insurance branches, and by using the Friedman test, it was determined that the dimensions of the balanced scorecard model have the same importance in the insurance industry. Finally, using the TOPSIS technique, the ranking of entrepreneur insurance branches in the cities of Kashan, Hamedan and Isfahan in 2009 and 2010 was discussed.

Key words:

Performance evaluation, balanced scorecard, ranking, TOPSIS technique, branches of insurance companies

Chapter one

General research

1-1- Introduction [1]:

Today's organizations with increasing competition due to globalization of business, explosion of technology and organizational knowledge, creation of knowledge and ability to innovate with many challenges including; They face limited and running out financial resources, increased customer expectations and pressure for greater transparency and accountability, increased tasks and activities, and an influx of different management solutions to improve the organization's situation. In such an environment, performance evaluation [2] is very complicated and difficult. Therefore, one of the basic concerns of today's organizations is to achieve a comprehensive, reliable and flexible performance evaluation method (Tabari, 1387, p. 12).

With the emergence of the information age, it is not possible to evaluate the performance of organizations only by applying past financial criteria, and organizations need evaluation in all their financial and non-financial dimensions. Therefore, creating a transformation in the evaluation system and using new performance evaluation methods is inevitable (Safari and Madah, 2012, p. 25).

Until now, various tools have been presented to cover this gap, the most famous of which is a tool called Balanced Scorecard (BSC)[3]. The balanced performance evaluation method as a performance evaluation system, in addition to the financial evaluation that relies on traditional accounting scales, evaluates the organization's performance from all dimensions, both financial and non-financial.

Insurance industry[4] is one of the industries that has high prestige and importance in the new economy and domestic and foreign trade and the essential role it plays in the gross domestic product. Performance evaluation of insurance companies, in addition to determining the general position of the company in the industry and market and informing the stakeholders, increases the competition and dynamism of the industry and the development of the society (Hajiani, 2019, p. 77). Insurance companies by examining their quality and how they perform and measuring them is a step to continuously improve the performance of these branches, so the present research aims to evaluate the performance and ranking of insurance company branches based on their performance.Therefore, in order to evaluate the performance of insurance company branches after reviewing various performance evaluation models, the balanced performance evaluation model was considered as the research framework. At the beginning of the research work, the key performance indicators were identified and approved by the managers, experts and experts of the insurance industry, and then the information related to each of the indicators was collected. In the following, using the opinions of experts [5] and experts through weighting the indicators, the degree of importance and priority of each of them was determined, and a proposed and practical model was presented in order to reach the appropriate indicators for ranking the branches of insurance companies [6]. In the end, the TOPSIS technique was used to rank the branches of insurance companies.

Therefore, the overall process of this research consists of 3 stages of literature review, data collection and data analysis, which includes; Defining the problem, examining performance evaluation models and choosing a balanced performance evaluation model, extracting performance indicators, final verification of indicators and gathering information, determining the degree of importance of criteria and performance indicators (prioritization of indicators), designing a suitable model for performance evaluation, and finally ranking insurance company branches (implementation of the model). It should be noted that the proposed model is inspired by the balanced performance evaluation model, 48 indicators [7] in the form of 11 criteria [8] are presented separately for each aspect. Many stakeholders are placed; It is appropriate to address this issue with great importance (Yari, 2019, p. 47). The lack of centralized databases, the absence of a strong and efficient information exchange network, the absence of a codified system and methodology, the absence of sufficient rules and regulations, the absence of a codified strategy and plan, as well as the absence of specialized and independent rating institutions, has not found a suitable place (Mirzaei and Safari, 2018, p. 16). (Hajiani, 1389, p. 77). Considering the very high importance of the insurance industry in the growth and development of countries, evaluating the performance and ranking of insurance companies is of great importance, and since insurance companies provide public services and are considered the driving force of society, if their performance is not evaluated, they will face economic and social challenges to the society. What are their uses? In general, the basic purpose of rating is to evaluate the reliability of insurance companies (Mirzaei and Safari, 2018, p. 16).

The rating of insurance companies has been for more than a century, which is one of the most essential information provided to the economic operators of developed countries, so that society and stakeholders, including customers, managers and employees, shareholders, brokers, reinsurers, banks and investment institutions, economic advisors and especially supervisors, can make the right choice. guide economic decisions (Hajiani, 2019, p. 78).

It should be noted that the rating should be done by reliable and independent private institutions in order to be more reliable. due to the lack of independent private rating institutions in Iran and the lack of access of Iranian insurance companies to international rating institutions; For example, AM Best, Standard & Poor's, Moody's International, S&P in order to get a rating due to the conditions of sanctions, the insurance industry is basically faced with a gap in the rating evaluation of insurance companies.

In Iran, the rating of insurance companies is often viewed as a financial evaluation, and unfortunately, the Central Insurance of the Islamic Republic, as the custodian, ranks insurance companies using a series of indicators that mostly examine the financial aspects of insurance companies, and this institution has no supervisor. Paying attention to the correct methodology is used to assess and rank insurance companies, which unfortunately not only does not help in making correct economic decisions, but its results can cause confusion and confusion.