An extended best–worst multiple reference point method: application in the assessment of non-life insurance companies

Abstract

Abstract In this paper a multi-criteria decision-making (MCDM) method is developed to rank a set of insurance companies. The proposed method is based on combining two MCDM methods: Extended Best–Worst (EBW) and Multiple Reference Point (MRP) methods. We formulate the problem of finding a priority vector from a set of interval pairwise comparisons applying an EBW method which allows the decision maker (DM) to use interval values in order to describe the relative importance of one criterion over another. The EBW method, using fuzzy set theory, can successfully handle the vagueness and ambiguity present in the judgments. Lastly, the MRP method is employed to obtain an overall score for each company using the weights established at the first stage. A case study is presented to rank Spanish non-life insurance companies based on the constructed model. Since the evaluation of insurance companies involves a great number of indicators, it is a complex MCDM issue. The results show the effectiveness of the proposed method and offer an insightful reference for an evaluation of the insurance industry.