A Consolidated MCDM Framework for Overall Performance Assessment of Listed Insurance Companies Based on Ranking Strategies

Abstract

The main objective of this study is to analyze the performance of non-life insurance companies operating in the Turkish insurance industry with a hybrid model including Pythagorean Fuzzy Analytic Hierarchy Process (PFAHP) and Multi-Attributive Ideal-Real Comparative Analysis (MAIRCA) methods. For this purpose, the performance assessment indicators, consisting of fourteen sub-criteria in three dimensions are taken into account for comparing five insurance companies traded on the Borsa Istanbul (BIST) over five consecutive years (2015 to 2019). Subsequently, year-wise rankings are aggregated using the Borda count (BC) procedure. The results of PFAHP indicate that service network is the most important main criterion (dimension) for performance assessment of non-life insurance companies, followed by stock market performance and financial ratios that come in the second and third ranks, respectively. Furthermore, the results of MAIRCA based on BC procedure reveal that Halk Sigorta, a state-owned insurance company, is the most successful company in terms of selected performance indicators in the period examined. A comprehensive sensitivity analysis is performed in order to test stability and the robustness of the results from the proposed framework, and the results of sensitivity analysis confirms the rationality and robustness of the suggested integrated MCDM framework. As a result, the suggested assessment framework can be applied by different decision-making groups in the industry as a valuable and practical decision-making tool for monitoring and improving the performance of insurance companies. Finally, some of managerial implications are also discussed.