The objective of this paper is to investigate, via relational model of two-stage data envelopment analysis, the efficiency decomposition in a two-stage production process where the outputs of the first stage are the inputs of the second stage. Unlike previous studies which used to treat the whole production process and the two sub-processes as in-dependent, this paper takes the series relationship of the two sub-processes into account in measuring the efficiencies. The insurance companies in Iran whose production process resembles the two-stage process are utilized to illustrate this idea. The results of the relational two-stage approach are compared to those calculated by the indepen-dent two-stage approach. The comparison of the responses indicates that results of relational and independent models correlate with each other, but results of rela-tional model are more meaningful and reliable. For example results of relational model in table 2 indicate that MELLAT insurance company is efficient in terms of whole efficiency and also is efficient in terms of the efficiency of stage 1 and stage 2 this result is consistent with logic and can describe people's expectation from physical relation of the whole process and the two sub-processes. But results of independent model in the same table indicate that PASARGAD insurance company is efficient in terms of whole efficiency but has very low efficiency score in terms of stage 1 this result is not rational and cannot fulfill people's expectation from physical relation of the whole process and the two sub-processes.
