The paradox of regulated expense limits and operational efficiency in non-life insurance companies in Vietnam

Background: The present research analyzes the impact of the new legal framework (Law on Insurance Business 2022 and Circular 67/2023/TT-BTC) on the operational efficiency of 32 non-life insurance companies in Vietnam during the 2019–2025 period. Methods: A mixed-method approach is utilized to investigate this phenomenon. The study integrates the dynamic data envelopment analysis (DEA-Malmquist) model with semi-structured in-depth interviews involving 15 high-level experts. Results: The findings reveal a distinct paradox: structural cost constraints facilitate short-term management efficiency improvements (Effch = 1.052), yet they simultaneously stifle the drive for technological innovation (Techch = 0.921). Consequently, the industry experiences a decline in total factor productivity (TFP = 0.968). Conclusion: This paper contributes to the theoretical foundation of institutional economics by demonstrating how statutory limitations reshape the resource allocation behavior of enterprises. Furthermore, it proposes optimal Insurtech strategies to help firms navigate and overcome this institutional constraints.