The purpose of this paper is to find out various business factors to affect insurer's operation under bancassurance, and suggests useful implications for the strategies of insurance companies. DEA is employed to measure the actual and bancassurance scenario cost efficiency of insurance companies. We also regress firm-characteristic variables on the both cost efficiencies and compare the two regression results.
The regression results show the following findings. Firstly, the more an insurer focuses on insurance sales activities rather than on insurance production activities, the more the insurer raises its cost efficiency through distribution alliance with banks. Secondly, term insurance may not be appropriate for distribution alliance with banks. Thirdly, the small and medium size insurers had better engage in distribution alliance than never. Finally, similar to the small and medium size insurers, it may be desirable for the geographically predominant insurers to participate in distribution alliance.