Abstract
The growing importance of life insurance in the world imposes a greater need for research in this area, particularly in the Western Balkans where the trend of growth has been closely accompanied by life insurance for the past two decades. Taking into consideration that life insurance companies are significant participants in the financial market, this research paper examines the impact of the premium reserve on the volume of financial investments of life insurance companies in Western Balkan countries, based on aggregate data on country level. In order to test its effect, linear correlation and regression models were used, based on data collected for the period 2006-2016. Additionally, comparative analysis was used to compare the position of life insurance companies in financial markets. The results obtained by applying correlation and regression analysis showed that there is a strong positive correlation between premium reserve and financial investments in all of the aforementioned countries in the region. This result is an important strategic guideline for the regulators and policymakers to make advancements in the life insurance sector as well as in the financial market of the Western Balkans.
Highlights
The growing importance of life insurance in the world imposes a greater need for research in this area, in the Western Balkans where the trend of growth has been closely accompanied by life insurance for the past two decades
Insurance companies are important for protecting the lives and properties of citizens, but they emerge as important participants in the financial market due to the investments of free funds raised through premiums
This paper explores a research question that analyzes the impact of changes in the volume of premium reserve on the volume of financial investments in Western Balkan countries
Summary
98 538 304 characterized by a low transaction volume and limited mobility of capital due to high costs (Nuhiu & Hoti, 2011) This is the basis for explaining why the structure of financial investments in the observed countries is more oriented towards short-term and safer investments. All papers dealing with the financial market in Western Balkan countries point out that financial markets are in the development phase, with the need for their further improvement. Correlation and regression methods were used to examine the impact of the premium reserve on the volume of financial investments of life insurance companies in Western Balkan countries.
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