Decision Making: Applications in Management and Engineering

Vol. 4, Issue 1, 2021, pp. 33-50.

ISSN: 2560-6018
eISSN: 2620-0104
DOI: https://doi.org/10.31181/dmame2104033d

PERFORMANCE EVALUATION OF AN INSURANCE

COMPANY USING AN INTEGRATED BALANCED
SCORECARD (BSC) AND BEST-WORST METHOD (BWM)
Rishi Dwivedi 1, Kanika Prasad 2*, Nabankur Mandal 3, Shweta Singh 1,
Mayank Vardhan 1 and Dragan Pamucar 4
1 Department of Finance, Xavier Institute of Social Service, Ranchi, India
2 Departmentof Production and Industrial Engineering, National Institute of
Technology, Jamshedpur, India
3 Department of Mechanical Engineering, MCKV Institute of Engineering, West Bengal,

India
4 Department of Logistics, Military academy, University of Defence in Belgrade,

Belgrade, Serbia

Received: 19 October 2020;

Accepted: 5 December 2020;
Available online: 13 December 2020.

Original scientific paper

Abstract: Recent economy and financial business environment is undergoing
a quick and accelerating revolution and paradigm shift, resulting in growing
uncertainty and complexity. Therefore, the need for an all-inclusive and far-
reaching performance measurement model is universally felt as it can provide
management-oriented information and act as a supporting tool in developing,
inspecting, and interpreting policy-making strategies of an enterprise to
achieve competitive advantages. Hence, this paper proposes an application of
the balanced scorecard (BSC) model in an insurance organization for
coordinating and regulating its corporate vision, mission, and strategy with
organizational performance through the interrelation of different layers of
business perspectives. In the next stage, a framework to unify both BSC and
best-worst method (BWM) models is implemented for the very first time in the
insurance domain to assess its performance over two-time periods. The
integrated BSC-BWM model can help managers and decision-makers to figure
out and interpret competing strength of the said enterprise and consecutively
expedite inefficient and compelling decision making. Nevertheless, this
integrated model is embraced and selected for a certain categorical business
and there is enough future scope for its application to distinct industries.

* Corresponding author.
E-mail addresses: [email protected] (R. Dwivedi),
[email protected] (K. Prasad), [email protected] (N. Mandal),
[email protected] (S. Singh), [email protected] (M.
Vardhan), [email protected] (D. Pamucar).
 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
Key words: Service sector, Insurance industry, BSC model, Best-Worst
Method, BWM, Performance evaluation.

1. Introduction
Insurance is a contract or an agreement between an individual and a company,
where the company pledges to pay an amount of sum assured to its customers against
the insurance based on its terms and policies. The most significant reason for having
insurance is that it provides security in many terms, to name a few: it generates
financial resources, promotes economic growth, keeps commerce moving, ensures
business and family stability, and encourages savings thereby securing future goals. A
well-designed insurance plan helps in managing risks. In today's competitive world
every company in the insurance sector tries hard to satisfy its customers. Every day
the companies are introducing new plans and policies to attract new customers and
retain their initial customer base.
The insurance sector plays a vital role in the development of the economy of any
country. It is the only sector that garners long terms savings and generates funds for
the development of the capital market and infrastructure, and hence providing
stability to the growth of the economy. Besides, insurance is a vital component in
carrying out smooth operational processes of national economies throughout the
world. In developed countries, such as Germany, England, Switzerland, France, etc.
insurance has become an important component of the economy as it contributes
majorly to the global market. The Indian insurance sector has faced many stumbling
blocks to attain its current position. Liberalization, privatization, and globalization
(LPG) reforms in the year 1991 have played an important part in the development of
this sector in India. Based on a report published by India Brand Equity Foundation in
2019, the overall insurance industry in India is expected to reach US$ 280 billion by
2020. The life insurance industry in the country is expected to grow by 12 % to 15 %
annually for the next three to five years. Hence, the insurance sector is one of the
booming sectors of the Indian economy.
Traditionally, the performance evaluation of an insurance organization’s progress
is carried out based on financial and customer factors only, which are mostly past
indicators of success. The future drivers of progress for the enterprise are generally
encompassed in the learning and growth and internal business perspectives of the
balanced scorecard (BSC) model and are not taken into consideration in the traditional
models of performance evaluation. BSC model considers both lagging and leading
factors. The leading factors are also termed as futuristic parameters. They include the
internal business perspective and the learning and growth perspective. The BSC model
works with a holistic and integrated view of the business. It is a present-day
performance measurement technique designed to overcome the drawback of
traditional performance measurement systems. It is a performance measurement tool
that consists of a set of measures that facilitates the enterprise's view of its overall
performance. However, with time the BSC model has also been used as a strategic
management tool as it can identify the key performance indicators (KPIs) of a
company. In this paper, a BSC model is proposed for an insurance company operating
in India while considering multiple factors such as profit after tax (PAT), operating
profit ratio, asset under management (AUM), number of products, market share, etc.
impacting the performance of the considered organization. Next, the best-worst
method (BWM) is employed in this paper to solve the multi-criteria decision-making
(MCDM) problem. According to the BWM technique, the best or the most important
and the worst or the least important business performance evaluation criteria of an
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 Performance evaluation of an insurance company using an integrated BSC and BWM
insurance company are identified first by the decision-makers. Further, pair-wise
comparisons are carried out for best to others identified criteria, and others chosen
criteria to worst criterion. A maxi-min problem is then formulated and solved to
determine the optimal weights of the different business performance parameters. A
consistency ratio is estimated in the next step of BWM methodology to check and
verify the reliability of the comparisons (Vesković et al., 2020). Furthermore, an
integrated BSC-BWM structure is also designed in this paper to evaluate and appraise
the progress of selected insurance enterprises over two time periods concerning key
performance measures of the proposed BSC model to demonstrate the efficiency and
effectiveness of management strategies applied. The results derived from the
implementation of the above models would not only facilitate business performance
measurement of the organization during a time period in quantitative terms but would
also help the decision-makers to recognize what should be carried out and measured
in an organization to reinforce and boost its productivity, performance, and progress.
The results obtained from the application of the above model also contribute to the
long term sustenance of the organization.

2. Review of literature
Rezaei (2015) proposed a new technique BWM to solve multi-criteria decision-
making problems. Rezaei et al. (2016) developed a supplier selection model for food
industry using the BWM tool. Ahmadi et al. (2017) employed BWM in manufacturing
companies to analyze the social sustainability of their supply chains. Gupta (2018)
applied hybrid BWM to identify the service quality parameters in the airline industry
and then prioritized them based on customers’ needs. Rezaei et al. (2018) developed
a weighted logistics performance index based on the BWM method. Salimi and Rezaei
(2018) proposed a multi-criteria decision-making method called BWM to calculate the
weightage of research and development measures in small and medium-sized
enterprises (SMEs). Zhao et al. (2018) and Kushwaha et al. (2020) implemented a
hybrid framework on the basis of the BWM technique to assess the comprehensive
benefit of eco-industrial parks in terms of circular economy and sustainability.
Pamucar (2020) employed BWM for determining criteria weights in supply chain
management.
Brunelli and Rezaei (2019) examined the BWM methodology for the MCDM
problem from a more mathematical perspective. Kheybari et al. (2019) developed a
BWM model for bioethanol facility location selection in provinces of Iran. Zolfani and
Chatterjee (2019) not only investigated the weighting of important and related criteria
for sustainable design but also evaluated the similarities and differences between
the step-wise weight assessment ratio analysis (SWARA) and BWM techniques.
Chen et al. (2011) proposed an effective performance evaluation model based on
the BSC technique which helped decision-makers to understand apt actions and
achieve a competitive advantage. Mendes et al. (2012) applied the BSC model in the
Urban Hygiene and Solid Waste Division of the Loulé Municipality in the south of
Portugal. Andjelkovic Pesic and Dahlgaard (2013) suggested that there were strong
positive correlations between the BSC perspectives and European Foundation for
Quality Management (EFQM) Excellence model criteria. Hakkak and Ghodsi (2014)
concluded that the BSC model helped organizations in achieving sustainable
competitive advantage. Staš et al. (2015) designed a conceptual framework for
creating the Green Transport (GT) and BSC models from the viewpoint of industrial
companies and supply chains using an appropriate MCDM method. Dwivedi and
Chakraborty (2016) developed a BSC model for an Indian thermal power plant to help
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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
the organization to make strategic and tactical decisions. Anjomshoae et al. (2017)
proposed a dynamic BSC model in the humanitarian supply chain. Dwivedi et al.
(2018) designed a technique based on BSC for an Indian seed manufacturing
organization to know about its performance so that the managers can align a
company’s operation with the existing business environment. Abdelghany and Abdel-
Monem (2019) applied the BSC model that provided the utilities' managers with a fast
but comprehensive view of the utilities’ performance. Mohammadi et al. (2019)
developed a feasibility test model for creative experiences based on the BSC technique
through qualitative content analysis.
It can be comprehended from the ongoing literature review that earlier
researchers have individually developed tools either by applying BSC or BWM for
different real-world scenarios. The previous research works by past researchers have
not consolidated BSC and BWM together. Thus, by applying the two methodologies
together, this research work focuses on doing the performance evaluation of an
insurance organization in India while understanding the leading and lagging
parameters that contribute to the success and failure of the selected organization.
Consequently, this integrated BSC and BWM model would fill the present gap for the
real-time practical implementation of combined BSC as a BWM tool. This model would
provide the latest perspective and motion for addressing real-world business
performances and their assessment.

3. BSC model
Traditional performance measurement systems study and review the progress of
an organization basically on the basis of a short-term financial objective. Those are no
longer relevant to conquer the challenges faced by the organizations in recent times.
Furthermore, with dynamic and growing business environment organizations have to
make sure that their strategies are transformed into subsequent actions through a
more meticulous and precise consideration of the objectives of related stakeholders.
BSC model is often suggested and approved as an inclusive management tool linking
critical strategic and short-term action planning (Kaplan, 1994; Badi et al., 2019). This
technique is developed in such a way that it cancels the most typical and trivial mistake
of the existing traditional systems of performance management, i.e. describing and
reporting only on the basis of financial data. In today’s cut-throat aggressive and
competitive market, it is even more critical to attaining a balance between financial
and non-financial data in management reporting and recording. Therefore, BSC is
developed as a modern performance evaluation procedure to overcome the defect of
the formerly adopted performance measurement systems through introducing four
perspectives, i.e. financial perspective, customer perspective, internal perspective,
and learning and growth perspective on which development and pace of an
organization would be assessed. Financial and customer measures take into account
the past performance of the organization and they are termed as lagging indicators.
On the other hand, internal business process, and learning and growth perspective are
leading indicators. Thus, a BSC model provides a holistic and integrated view of the
business concerning four perspectives to the management. All the KPIs that are
identified for the BSC model under each perspective must fit the sequence of cause and
effect relationships within them.

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 Performance evaluation of an insurance company using an integrated BSC and BWM
3.1. Designing of the BSC Model for an Insurance Sector Organization
Developing a suitable BSC model for an enterprise needs a subtle evaluation of the
organization’s foundations, core values, beliefs, ideas, opportunities, financial
position, short-term and long-term goals, and operating business. The confidentiality
of the studied organization is maintained here and hence, the name of the insurance
enterprise is not being revealed and hereafter, it is referred to as ABC Limited. It is an
organization that is growing at a rapid pace for a strong presence in the domestic
insurance market. ABC Limited has exclusive, remarkable, and innovative insurance
products that help it to compete in the market. All the data required for the
development of a performance measurement tool based on the BSC model pertains to
the financial years 2016-2017 and 2017-2018. Here, a focused group is selected
constituting of subject experts to develop a BSC model for ABC Limited, while keeping
a balanced representation of KPIs from each perspective. Figure 1 displays the
developed BSC model for ABC Limited. It can be observed that the developed BSC
model identified 20 business performance indicators that provide the management
with a concise summary of the KPIs of ABC Limited. These performance measures also
assist in appropriately coordinating and regulating the business processes of ABC
Limited with its overall policy. Each identified performance parameter signifies a
particular goal and competence of ABC Limited for all the four perspectives of the
developed BSC model. For example, the key performance measure indicator of PAT
suggests how much the organization really earns after paying interest and tax and how
much it can utilize for its day to day business activities, whereas the operating profit
ratio explains the profit a company generates after paying for variable costs of
production, such as wages, raw materials, etc. The earning per share (EPS) is a critical
and essential financial measure, which illustrates and reveals the profitability of a
company. It is of utmost relevance and vital for people and investors trading in the
stock market. EPS of a company is directly related to its profitability. On the other
hand, gross written premium (GWP) is the total revenue from a contract expected to
be received by an insurance company before deductions for reinsurance and ceding
commissions. Moreover, average claim settlement time (in days), number of insurance
products, number of branches, market share, and number of agents reveal the
relationship of ABC Limited with its customers, which acts as a stimulant for its future
growth. Further, the number of policies issued, AUM, number of employees, the
amount spent on corporate social responsibility (CSR) activities, and numbers of
transactions managed (in lakhs) are the internal performance measures that show the
operational competence of ABC Limited to deliver its products and provide services
consistently. Next, net promoter score (NPS), training expenses, transactions managed
and policies issued within the turnaround time (TAT), management expenses, and
employees' remuneration and welfare benefits represent the learning and growth
aspect in the organization, which are of predominant importance for its long-term
success while operating in a competitive insurance sector. Thus, the developed BSC
model can expedite an effective monitoring of the organization's overall progress. This
model successively helps the decision-makers in future strategy formulation.

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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50

Figure 1: Developed BSC Model for ABC Limited

4. BWM technique
BWM is a multi-criteria decision-making (MCDM) tool developed to overcome the
drawbacks of previously existent methods, like the analytical hierarchy process (AHP)
in 2015 (Rezaei, 2015). BWM can be used in various decision-making fields, such as
health, information technology, engineering, business, economics, and agriculture. In
fundamental, wherever the objective is to rank and select a preference among a set of
options, this method can be used. The pertinent features of BWM as compared to most
current MCDM methods are that it requires fewer comparisons of data and leads to
more dependable, steady, logical, and rational comparisons, which implies that the
BWM model produces more decisive and stable results (Bozanic et al., 2020).
The BWM technique is employed to examine a set of alternatives with respect to
some chosen criteria. It is based on a systematic pairwise comparison of the decision
criteria, i.e. after identifying the decision criteria, two criteria are selected as the best
decision criterion and the worst decision criterion by the decision-makers or experts.
The best criterion is the one that has the most important and crucial role in making
the decision, while the worst criterion has the opposite significance (Pamucar & Ecer,
2020). The decision-makers then give their preferences of the best decision criterion
over all the others and also their preferences of all the other criteria over the worst
decision criterion using a number from a predefined scale of 1 to 9. These two sets of
pairwise comparisons and correlation are used as input for an optimization problem,
the optimal results of which are the weights of the criteria.

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 Performance evaluation of an insurance company using an integrated BSC and BWM
5. Development of a business performance measurement tool for an
insurance sector organization employing BSC and BWM tools
The performance evaluation of an insurance company is dependent upon various
factors. Here, the important drivers impacting the performance of selected insurance
organization is already identified as the 20 KPIs of the BSC model. Next, in order to
determine the relative importance of selected KPIs, it is worthwhile to employ an
MCDM method. Several MCDM methods have been applied in earlier studies for
different selection problems. In this study, BWM is implemented for the evaluation of
identified KPIs for the chosen insurance organization. This methodology has been
successfully applied in several distinct real-world problems. Moreover, compared to
other similar existing MCDM methods, BWM needs less pairwise comparison of data
and the results achieved by it are more consistent.

5.1. Steps in Implementation of BWM Technique

The steps followed in BWM are as follows:
Step 1. Identify a set of evaluation criteria. In this step, a set of criteria {c1, c2,
c3,…..,cn} is chosen for making a decision.
Step 2. The best criterion (most imperative or most important or most significant)
and the worst criterion (least imperative or least important or least influential) are
determined based on the decision-maker(s) or expert(s) opinion.
Step 3. The preference of the best decision criterion over all the other decision
criteria is determined based on a score between 1 and 9, where a score of 1 means
equal preference between the best criterion and another criterion and a score of 9
means the extreme preference of the best criterion over the other criterion. The result
of this step is the vector of best-to-others (BO) and is represented by vector AB:
AB = (aB1, aB2, aB3,….., aBn),
where aBj indicates the preference of the best criterion B over criterion j, and it can
be deduced that aBB = 1.
Step 4. The preference of all the other decision criteria over the worst criterion is
determined based on a score between 1 and 9. The result of this step is the vector of
others-to-worst (OW) and is indicated by vector AW:
AW = (a1W, a2W, a3W,……………., anW)T,
where ajW shows the preference of the criterion j over the worst criterion W. It also
can be deduced that aWW = 1.
Step 5. The optimal weights (w1*, w2*, w3*,………, wn*) are calculated. The optimal
weight of the criteria satisfies the following requirements: For each pair of w B/wj and
wj/ww, the ideal situation is where wB/wj = aBj and wj/ww = ajw. To satisfy these
conditions for all j, a solution should be found where the maximum absolute
𝑤𝐵 𝑤𝐵
differences |wB/wJ – aBj| | − 𝑎𝐵𝑗 | | − 𝑎𝐵𝑗 | and |wj/ww - ajw| for all j is minimized.
𝑤𝑗 𝑤𝑗
Considering the non-negativity and sum condition for the weights, the following
problem is resulted:

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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
minx
Subject to,
wB / wJ – aBj  x, For all j,
(1)
w j / ww – a jw  x, For all j

w j  1
w j  0, for all j
After solving problem Equation (1), the optimal weights (w1*, w2*, w3*, …..wn *) and
ξ* are obtained. ξ* can be seen as a direct indicator of the comparison system’s
consistency. The closer the value of ξ* is to zero, the higher the consistency, and,
therefore, the more reliable and steadier the comparisons become.

5.2. Application of the BWM in Insurance Organization

Through the literature review and expert's view, 20 KPIs impacting the
performance of the selected insurance enterprise under four perspectives of the BSC
model is already identified in the previous section. Here in this research work, each
perspective of the BSC model is treated as the main business performance criteria.
Next, under all main business performance parameter for the chosen organization, five
different KPIs are considered as sub-business performance criteria as shown in Table
1.

Table 1. Performance Criteria of ABC Limited

Main business performance Sub business performance criteria
criteria
Market share (%)
Average claims settlement time (in days)
Customer perspective Number of branches
Number of products
Number of agents
PAT (in Rs - 000)
Operating profit ratio (%)
Financial perspective Earnings per share (EPS)
GWP (in Rs - 000)
Claims paid (in Rs - 000)
Number of employees
Number of policies issued
Internal business perspective AUM (in Rs - Crore)
Amount spent on CSR activities (in Rs)
Number of transactions managed (in Rs
Lakhs)
NPS
Training expenses (in Rs - 000)
Learning and growth Transactions managed and policies
perspective issued within TAT (%)
Management expenses (in Rs - 000)
Employees' remuneration and welfare
benefits (in Rs - 000)

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 Performance evaluation of an insurance company using an integrated BSC and BWM
After the four main business parameters and five sub-business performance
criteria under each of those main parameters are listed, the next step is to estimate the
relative weights of all sub-business performance parameters. This is carried out by
first finding the global weights of four main business performance parameters. After
that, the local weights of sub-business performance criteria under each main business
parameter are computed. Final weights of each sub-business performance criteria are
determined by utilizing Equation (2).
Final weight of sub business performance criteria 
Local weight of sub performance criteria  (2)
Global weight of main performance parameter

After carefully evaluating four main business performance parameters with

respect to the identified organization’s mission and operational constraints, the
financial perspective is identified as the best criteria whereas the learning and growth
perspective is selected as the worst one for ABC Limited. The experts specified the
preference of business performance criteria as shown in Table 2. Table 3 displays the
other best criterion with respect to selected other main main business performance
criteria’s preference over the least important criterion.

Table 2. Preference of best criterion with respect to selected other main

business performance criteria
Internal Learning and
Best to Financial Customer
Business growth
others perspective perspective
perspective perspective
Most
important :
1 2 4 5
Financial
perspective

Table 3. Other main business performance criteria’s preference over the

least important criterion
Others to the worst Least important: Learning and Growth
Financial perspective 5
Customer perspective 4
Internal business perspective 2
Learning and growth perspective 1
Next, the optimal global weights of the main business performance criteria for ABC
Limited are calculated through solving Equation (1) while implementing the steps of
the BWM technique as discussed in the earlier section. Table 4 shows the estimated
global weights for all main business performance criteria with the consistency ratio
(Zolfani et al., 2020).

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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
Table 4. Global weights for main business performance criteria
Main business performance criteria Global weight
Customer perspective 0.2796
Financial perspective 0.4946
Internal business perspective 0.1398
Learning and growth perspective 0.0860
Consistency ratio, ξ* 0.0645
It can be observed from Table 4 that the financial perspective has the highest
weight of 0.4946. The financial perspective’s influence is the most critical and essential
criterion when ABC Limited attempts to accomplish its mission and objectives. This is
followed by the customer perspective and internal business perspective with weights
of 0.2796 and 0.1398 respectively. The learning and growth perspective has the lowest
criterion weight of 0.0860 showcasing its minimal relevance and importance in the
comprehensive business growth of ABC Limited. The consistency ratio (ξ*) is close to
zero, i.e. 0.0645, which shows the high reliability and authenticity of the comparisons.
Furthermore, the sub-business performance criteria under the main business
performance parameter of a financial perspective are examined to compute their local
weights. Here, PAT is identified as the best sub-criterion whereas claims paid are
selected as the worst one for ABC Limited. The best sub-criterion to other related sub-
criteria comparisons and others sub-criteria to worst sub-criterion comparisons of the
financial perspective of ABC Limited is shown in Table 5 and Table 6.

Table 5. Preference of best sub-criterion of financial perspective with

respect to other sub-business performance criteria of financial perspective
Best to others PAT Operating EPS GWP Claims
profit ratio Paid
Most important : 1 2 4 5 9
Profit after tax

Table 6. Other sub-business performance criteria’s preference over the

least important criterion of financial perspective
Others to the worst Least important: Claims paid
PAT 9
Operating profit ratio 8
EPS 6
GWP 4
Claims paid 1
Local weights for the five sub-business performance criteria under the main
business performance parameter of financial perspective are estimated while
following steps of BWM implementation as discussed in the earlier section and are
displayed in Table 7.

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 Performance evaluation of an insurance company using an integrated BSC and BWM
Table 7. Local weights for sub business performance criteria of financial
perspective
Sub business performance criteria Local weight
PAT 0.4457
Operating profit ratio 0.2713
EPS 0.1357
GWP 0.1085
Claims paid 0.0388
Consistency ratio, ξ* 0.0969
It can be interpreted from Table 7 that PAT is the most crucial sub-business
performance criteria under the financial perspective with a local weight of 0.4457,
followed by an operating profit ratio with the local weight of 0.2713. Claims paid under
financial perspective with a local weight of 0.0388, is having minimal significance. The
consistency ratio, ξ* for this particular estimation is 0.0969 showing its high
consistency and reliability.
In a similar manner, the relative significance of sub-business performance criteria
encompassed under the other three main business performance criteria, i.e. customer,
learning and growth, and internal business perspectives are calculated as shown in
Table 8.

Table 8. Local weights for sub business performance criteria of customer,

learning, and growth, and internal business perspectives
Main business Sub business performance criteria Local
performance criteria weight
Customer perspective Market share 0.4416
Average claims settlement time 0.2589
Number of products 0.1726
Number of agents 0.0863
Number of branches 0.0406
Consistency ratio, ξ* 0.0761
Internal business AUM 0.4615
perspective Number of policies issued 0.2706
Number of employees 0.1353
Number of transactions managed 0.0902

Amount spent on CSR activities 0.0424

Consistency ratio, ξ* 0.0796
Learning and growth NPS 0.4560
perspective Transactions managed and policies issued 0.2606
within TAT
Training expenses 0.1303
Employees' remuneration and welfare 0.1042
benefits (Rs - 000)
Management expenses 0.0489
Consistency ratio, ξ* 0.0651

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After the global weights for all four main business performance criteria and local
weights of 20 sub business performance parameters are estimated, final weights of
those sub-business performance criteria need to be estimated using Equation 2. For
example, to estimate the final weight of PAT, its local weight, i.e. 0.4457 is multiplied
with the global weight of main business performance criteria of financial perspective
under which it falls, i.e. 0.4946. Thus, the final weight of the PAT is calculated as
0.2205. The computed final weight of all sub-business performance criteria of ABC
Limited is shown in Table 9.

Table 9. The final weight of all sub-business performance criteria of ABC

Limited
Main Global Sub business performance Local Final
business weight criteria weight weight
performance (i) (ii) (i) *
criteria (ii)
Customer 0.2796 Market share 0.4416 0.1235
perspective Average claims settlement time 0.2589 0.0724
Number of products 0.1726 0.0483
Number of agents 0.0863 0.0241
Number of branches 0.0406 0.0114
Financial 0.4946 PAT 0.4457 0.2205
perspective Operating profit ratio 0.2713 0.1342
EPS 0.1357 0.0671
GWP 0.1085 0.0537
Claims paid 0.0388 0.0192
Internal 0.1398 AUM 0.4615 0.0645
business Number of policies issued 0.2706 0.0378
perspective Number of employees 0.1353 0.0189
Number of transactions 0.0902 0.0126
managed
Amount spent on CSR activities 0.0424 0.0059
Learning and 0.0860 NPS 0.4560 0.0392
growth Transactions managed and 0.2606 0.0224
perspective policies issued within TAT
Training expenses 0.1303 0.0112
Employees' remuneration and 0.1042 0.0090
welfare benefits
Management expenses 0.0489 0.0042

5.3. Designing a Performance Measure Index for ABC Limited

After the comparative importance of all sub-business performance, criteria are
determined for ABC Limited, an index is developed to assess the enterprise's overall
business performance. To compute the performance measure index and examine the
progress of ABC Limited concerning the performance evaluation parameters of the
BSC model, the related data for all the 20 recognized sub-business performance
criteria for two different time periods are required.
The first set of actual data related to the identified 20 performance measure
indicators for the initial period is set as the baseline value, which in this case is derived
from ABC Limited's annual report for the financial year 2016-17. Next, the current
period value illustrates the second data set for those selected 20 KPIs and is drawn

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 Performance evaluation of an insurance company using an integrated BSC and BWM
from the annual report of ABC Limited for the financial year 2017-18. An initial value
of 100 is assigned to all sub-business performance criteria and afterward, their
weighted points are calculated using Equation (3).
Weighted point 
(3)
Normalized performance measure weight  NPMW   Initial point
Afterward, the business performance measure index for the initial period is
estimated by taking the summation of all the initial period weighted points computed
for each sub-business performance criteria. Table 10 shows a detailed computation of
the performance measure index of ABC Limited for the initial period.

Table 10. The initial period performance index for ABC Limited
Sub business Baseline NPMW Initial An initial
performance criteria value point period
weighted
point
PAT 427973 0.2205 100 22.05
Operating profit ratio 2 0.1342 100 13.42
Market share 2 0.1235 100 12.35
Average claims settlement 46 0.0724 100 7.24
time
EPS 0.97 0.0671 100 6.71
AUM 2355 0.0645 100 6.45
GWP 18426964 0.0537 100 5.37
Number of products 114 0.0483 100 4.83
NPS 26 0.0392 100 3.92
Number of policies issued 1373056 0.0378 100 3.78
Number of agents 6000 0.0241 100 2.41
Transactions managed and 92 0.0224 100 2.24
policies issued within TAT
Claims paid 10131714 0.0192 100 1.92
Number of employees 1702 0.0189 100 1.89
Number of transactions 18 0.0126 100 1.26
managed
Number of branches 128 0.0114 100 1.14
Training expenses 162191 0.0112 100 1.12
Employees' remuneration 1264666 0.0090 100 0.90
and welfare benefits
Amount spent on CSR 1109000 0.0059 100 0.59
activities
Management Expenses 4646140 0.0042 100 0.42
Performance index - - - 100

To inspect and analyze the growth and advancement of the organization over the
considered period, the performance measure index for the consequent period is also
needed. So, the first step in calculating the performance measure index for the current
year is to calculate the current period points by the following equations. Equation (4)
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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
and Equation (5) are employed for beneficial and non-beneficial performance
parameters respectively.
Current period point   Current year value / Baseline value   100 (4)
Current period point 
(5)
200 –  Current year value / Baseline value   100 
Applying Equation (6), the value of the current period weighted point for the
individual sub-business performance parameter is now similarly estimated.
Weighted point 
(6)
Normalized performance measure weight  NPMW   Initial point
Next, the performance index for the current period is calculated by adding up all
the current period weighted points for all the individual sub-business performance
measures. The comprehensive estimation of the current period index for ABC Limited
is shown in Table 11.
A judgment of the performance measure index values for the current period with
those for the initial period, derived from Table 10 and Table 11 respectively, helps in
assessing and understanding the comprehensive business performance of ABC
Limited over the two different time periods and thus allowing the policymakers to
understand the effectiveness of various applied policies. It can be noticed that ABC
Limited has significantly improved its performance measure index to 129.98 for the
current period in comparison to 100 for the initial period. This implies that the said
enterprise is advancing in an appropriate direction to its organizational objectives,
vision, and mission. Furthermore, a comparison of the current period weighted point
with that of initial period weighted point values for individual sub-business
performance criteria suggests ABC Limited’s progression over two time periods with
respect to that particular criteria. It can be observed that ABC Limited has significant
enhancement and development in current period weighted point of PAT, operating
profit ratio, AUM, number of products, NPS, number of policies issued, number of
agents, and number of transactions managed with respect to their corresponding
values in initial period weighted point. The standard operating procedures of the
organization to achieve this advancement in the said criteria should be maintained in
the future also. Besides, it can also be noticed that although the organization is
progressing in the right direction, there is some sub-business performance parameter
on which ABC Limited is not advancing in the correct preposition. The sub-business
performance criteria on which ABC Limited is not performing well are market share,
average claims settlement time, EPS, transaction managed and policies issued within
TAT, training expenses, number of branches and employees’ remuneration and
welfare benefits. These identified parameters are the area where the resources need
to be deployed by the management of ABC Limited in order to convert them from
nonperforming criteria to performing criteria in the future. This can help the
organization in achieving long term sustenance.

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 Performance evaluation of an insurance company using an integrated BSC and BWM
Table 11. Performance index for current period for ABC Limited
Sub-business Current Current Current period
performance criteria period value period point weighted point
PAT 786281 183.72 40.51
Operating profit ratio 3 150.00 20.13
Market share 1.65 98.21 12.13
Average claims settlement
50 91.30 6.61
time
EPS 0.57 58.76 3.94
AUM 2992 127.05 8.20
GWP 19507884 105.87 5.68
Number of products 130 114.04 5.50
NPS 40.5 155.77 6.11
Number of policies issued 2012574 146.58 5.54
Number of agents 7500 125.00 3.02
Transactions managed
and policies issued within 90.4 97.94 2.20
TAT
Claims paid 9221366 108.99 2.09
Number of employees 1769 103.94 1.97
Number of transactions
29 161.11 2.03
managed
Number of branches 127 99.22 1.13
Training expenses 203982 74.23 0.83
Employees' remuneration
1351988 93.10 0.83
and welfare benefits
Amount spent on CSR
2104468 189.76 1.13
activities
Management Expenses 4650523 99.91 0.42
Performance index - - 129.98

6. Conclusion
The insurance sector is one leading sector for corporate houses for business
operation. The proposed model is inclusive of both lagging factors and leading factors
related to the business performance for an insurance sector organization. The
integrated BSC and BWM technique is a comprehensive and broad model for real-
world insurance sector application. Through this study, it can be comprehended that
a combined BSC-BWM model can be successfully applied to design a quantitative tool
to measure the business performance of an organization and monitor the efficiency
and effectiveness of the implemented strategies, which may drive the pathway for
future policymaking. In this combined model both past (lagging) and futuristic
(leading) parameters are taken into account with two different periods. This provided
better analysis and scrutiny of business operating data to the management of an
organization. The management can take corrective action to enhance the business
potential if there is a significant deviation from the desired and expected business
performance of the organization.
There is enormous competition among insurance sector organizations to enhance
their profit margin, market share, and customer base while minimizing operating
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 R. Dwivedi et al./Decis. Mak. Appl. Manag. Eng. 4 (1) (2021) 33-50
expenses and developing and launching new insurance products that are widely
accepted by customers. In this paper, a BSC model is first developed for an insurance
sector enterprise in India to identify a relevant range of financial and non-financial
parameters that supports effective and impressive business management. Next, a
business performance measurement tool combining BSC and BWM methods is
developed and applied in the said organization to exhibit how it can be engaged to
monitor the performance of the firm, which can be finally utilized as a driver for the
organization's future growth. This unified BSC and BWM model can also be employed
by other organizations of different sectors with minor adjustments. It requires time
and attention while defining the KPIs for the insurance sector which is a limitation of
the proposed work.

Author Contributions: Each author has participated and contributed sufficiently to

take public responsibility for appropriate portions of the content.

Funding: This research received no external funding.

Conflicts of Interest: The authors declare no conflicts of interest.

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