Insurance Companies Research Articles

Risk Management Strategies and Performance of Selected Insurance Companies in Nairobi City County, Kenya

The insurance industry plays a vital role in the management of risk and therefore helps to support and facilitate business activities. The performance of insurance companies is impacted by various challenges related to their risk management strategies. These challenges can arise from both internal and external factors, and they can have significant implications for the financial stability and profitability of insurance companies. Changes in regulatory requirements can impact the risk management strategies of insurance companies, requiring them to adapt their practices and systems to remain compliant. Therefore, this study seeks to investigate the influence of risk management strategies on the performance of selected insurance companies in Nairobi City County, Kenya. The study was guided by the balanced scorecard model, agency theory, portfolio theory, risk aversion theory, and prospect theory. A descriptive research design was employed. The study targeted 95 respondents, comprising 10 senior-level managers, 30 middle-level managers, and 55 departmental heads from the insurance companies operating in Kenya. A census of 95 respondents was conducted. The study used a structured questionnaire. A pilot group of 9 individuals was selected from the target population. Content validity was applied to the study. Cronbach’s Alpha coefficient was computed for all components of the questionnaire, and their assessment was provided. Descriptive analysis was computed using mean, frequencies, and percentages. Regression analysis tested the relationship between the study variables. The regression model assessed the relationship between the independent variables and the dependent variable. The findings were presented using tables and figures. Through regression analysis with a linear model result showed a strong relationship between risk management strategies and performance. The resulting value of regression coefficient at .000 (p<0.05) indicated existence of relationships that were relatively strong. The study thus concluded that performance of insurance companies is dependent on the careful choice or selection of risk management strategies. It is expected the results will benefit various stakeholders, including the government policy makers, Insurance sector players, and academia. Further studies exploring more strategies to manage risks in other entities including other sectors such as the finance sector could be undertaken by scholars.

OWA operators in the insurance industry

In this paper, we examine a possible application of ordered weighted average (OWA for short) aggregation operators in the insurance industry. Aggregation operators are essential tools in decision-making when a single value is needed instead of a couple of features. Information aggregation necessarily leads to information loss, at least to a specific extent. Whether we concentrate on extreme values or middle terms, there can be cases when the most important piece of the puzzle is missing. Although the simple or weighted mean considers all the values there is a drawback: the values get the same weight regardless of their magnitude. One possible solution to this issue is the application of the so-called Ordered Weighted Averaging (OWA) operators. This is a broad class of aggregation methods, including the previously mentioned average as a special case. Moreover, using a proper parameter (the so-called orness) one can express the risk awareness of the decision-maker. Using real-life statistical data, we provide a simple model of the decision-making process of insurance companies. The model offers a decision-supporting tool for companies.

Overview of retail investment instruments of the Russian economy

Features of the current stage of development of Russia increase the relevance of studying problems associated with the expansion of internal sources of financing economic growth, one of which may be citizens’ savings. To attract private capital more widely, the national financial system can and should provide a large range of tools for private investors that meet the needs of citizens in terms of profitability and safety of funds. The paper has considered the key tools of retail investment, which are currently widely used in domestic practice. Alternative ways of private investment have also been explored. They can be applied depending on the needs of specific actors, market participants, or citizens. The development of a line of instruments for the retail investment – deposits, long-term individual investment accounts, products of research and production associations, insurance products, etc., their availability is one of the conditions for the effective functioning of the domestic financial market and, as a consequence, the Russian economy as a whole. The analysis of the essence, trends, opportunities, and risks of the retail investment instruments will allow us to assess the effectiveness of the activities of financial regulators in this area and identify promising and appropriate areas for its improvement.

Examining the impact of intellectual capital on underwriting risk of insurance companies in Pakistan: static and dynamic panel regression

Purpose This study aims to examine the impact of intellectual capital on the underwriting risk of insurance companies in Pakistan. Design/methodology/approach The study used a quantitative research approach and a longitudinal research design, gathering data from 23 insurance companies listed on the Pakistan stock exchange from 2010 to 2022. The value-added intellectual coefficient (VAIC) was used to measure intellectual capital (IC), and unbalanced panel data were analyzed using static and dynamic regression analyses. Findings The findings demonstrate a significant association between intellectual capital and underwriting risk in insurance companies in Pakistan. Specific components of intellectual capital, such as human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE), have a strong negative impact on underwriting risk. Control variables like return on assets, insurer size and leverage also showed significant relationships with underwriting risk. Originality/value This research provides new insights into the theoretical understanding of the insurance industry by establishing a direct link between intellectual capital and underwriting risk in the context of Pakistan. It suggests that by improving aspects of intellectual capital, specifically HCE, SCE and CEE, policymakers and managers can reduce underwriting risk.

A sociotheological interpretation of Genesis 50:25 in a Zimbabwean context

Migration to foreign lands is as old as the biblical stories of Abraham leaving his native land, Ur of the Chaldeans to go to a land that God was to show him. Concomitant with migration, however, is the possibility of death in the new habitat and oftentimes important decisions are made on how to fund the funerals. In the case of Zimbabwean diasporas, this has seen the rise in popularity of funeral insurance companies such as Diaspora Insurance and the GoFundMe initiatives. While the issue of funding funerals appears to be the primary thing that people are seized with when a funeral strikes, the most salient aspects would be issues of religion and culture. This article endeavours to show how, despite the challenging economic environment, the costly repatriation of dead relatives can best be appreciated through a sociotheological interpretation of Genesis 50:25. In other words, Genesis 50:25 can be used as a mirror to understand the value people place on issues of religion and culture. It is thus my argument that the religious background of the actors as well as their socio-cultural setting are critical in making important decisions regarding the place of interment as well as influencing the funding logistics to take the corpse to the desired resting place.Contribution: As the death toll continues to rise of diasporas who would have gone offshore in search of a reprieve from the economic challenges that have become almost an indelible mark of Zimbabwe, issues around the values of traditional religion and culture continue to come to the fore. This research adds a voice to the ongoing religious and political dialogue in Zimbabwe in so far as it seeks to explain and understand the underlying reasons behind the costly repatriation of deceased relatives through a sociotheological reading of Genesis 50:25.

Modelling Motor Insurance Claims Using Arma Model And Appropriate Statistical Distribution Of Insurance Companies, Machakos County, Kenya

The prediction of future claim amounts based on past or present claims is a challenging task for insurance companies. According to research carried out by Michael Barth and David L. Eccles (2009); claim costs constitute large proportion of insurers expenses in evaluating the premium growth on the loss ratio of property causality insurers. Various statistical techniques have been employed to analyze claims data and assess its impact on productivity. Autoregressive (AR), Moving Average (MA), and Auto Regressive Moving Average (ARMA) processes are commonly used to model the temporal dependencies and trends in the data. These techniques enable insurance companies to understand the dynamics of claim incidence and their effects on productivity over time (Philip J, 2016). Advanced modeling techniques such as generalized additive models, negative binomial regression, and multinomial logit models have been used to evaluate claims processes, predict claim occurrence, and model claim severity (Renshaw A.E, 1994; Edward. W Frees et al., 2008; Daiane Aparecida Zanetti et al., 2006). These models consider various factors such as driver age, gender, vehicle type, and no claim discount to assess their impact on claim incidence and productivity. Previous studies have overlooked the comprehensive examination of the impact of insurance claims on productivity on insurance companies. Therefore, this research aims to address this gap by investigating the factors associated with insurance motor claims and their effects on the productivity of insurance companies by employing statistical techniques like appropriate probability distribution, incorporation of moving average technique, Autoregressive process and ARMA process, as identified by industry professionals and experts. The results obtained from the real-life data for distinctive 11 years indicated the potential strength of ARMA models to provide insurance company's claim amount prediction that could assist the companies to have better planning. The findings of this study, if adopted by various keynote players in the insurance and regulatory sectors, can be highly beneficial in formulating appropriate policies to enhance the management of motor insurance claims and improve the productivity of insurance companies.

Research on healthcare data sharing in the context of digital platforms considering the risks of data breaches

BackgroundWithin China's healthcare landscape, the sharing of medical data has emerged as a pivotal force propelling advancements in the insurance sector and enhancing patient engagement with healthcare services. However, medical institutions often exhibit reluctance toward data sharing due to apprehensions regarding data security and privacy safeguards. To navigate this conundrum, our research introduces and empirically validates a model grounded in evolutionary game theory, offering a robust theoretical framework and actionable strategies for facilitating healthcare data sharing while harmonizing the dual imperatives of data utility and privacy preservation.MethodsIn this paper, we construct an evolutionary game model involving medical institutions, big data innovation platforms, and insurance companies within the context of digital platforms. The model integrates exogenous causes of data breaches, endogenous causes of data breaches, compensation payments, government penalties, subsidies, unreasonable fees, claims efficiency, and insurance fraud.ResultsThe stability analysis of the evolutionary game identifies eight equilibrium points among medical institutions, platforms, and insurance companies. Numerical simulations demonstrate convergence toward strategy E7 = (0, 0, 1), suggesting a trend for medical institutions to adopt a fully anonymous information-sharing strategy, platforms to implement strict regulation, and insurance companies to opt for an auditing approach. Sensitivity analysis reveals that the parameters selected in this study significantly influence the players' behavioral choices and the game's equilibria.ConclusionsWhen breaches occur, medical institutions tend to seek co-sharing between platforms and insurance companies. This promotes enhanced regulation by platforms and incentivizes insurance companies to perform audits. If the responsibility for the breach is attributed to the platform or the insurance company, the liability sharing system will push healthcare organizations to choose a fully anonymous information sharing strategy. Otherwise, medical institutions will choose partially anonymous information sharing for more benefits. In case of widespread data leakage, the amount of compensation shall augment, and the role of compensation shall replace the role of government supervision. Then, the government shall penalize them, which shall reduce the motivation of each subject.

The Impact of Insurance-Specific Risk on Firm Performance of Listed Insurance Companies in Sri Lanka

Insurance-specific risk includes challenges and uncertainties specific to the operations and functioning of insurance companies. The study therefore investigates the effect of these insurance-specific risks on the profitability of listed insurance companies in Sri Lanka over 11 years (2012-2022) with a sample size of 27 firms. Three variables, such as reinsurance, technical provisions, and underwriting risks, have been used to measure insurance-specific risk as independent variables. The Return on Equity (ROE) and Re-turn on Assets (ROA) were used to measure firm performance as the dependent variable. The study is based on the Ex-Post Facto Research Design, which uses data already collected. The study used secondary data from their annual reports. The results of the fixed effect regression model showed that the technical provision risk and reinsurance risks had a negative and significant impact on ROE, while the underwriting risk had a negative and insignificant impact on ROE. The study concludes that the best model for the evaluation of Insurance firm performance is ROE rather than ROA. Due to the arguments, ROE and ROA are both considered performance indicators where ROA is not significant with variables. The study recommends that insurance companies in Sri Lanka should make sufficient provision for outstanding claims by conducting an adequate assessment of their liabilities and also taking into account experience to develop a comprehensive procedure for effectively monitoring and controlling their outstanding claims. Further, listed insurance companies in Sri Lanka will consider their reinsurance policies and risk retention ratios and listed insurance companies need to enhance their ability to cover most incurred claims by themselves.

An Insurtech Platform to Support Claim Management Through the Automatic Detection and Estimation of Car Damage from Pictures

Claims management is a complex process through which an insurance company or responsible entity addresses and handles compensation requests from policyholders who have suffered damage or losses. This process entails several stages, including the notification of the claim, damage assessment, settlement of compensation, and, if necessary, dispute resolution. Fair, transparent and timely claims management is crucial for maintaining policyholders’ trust while also limiting the financial impact on the insurer. Technological innovations, such as the use of artificial intelligence and automation, are positively influencing this sector, enabling faster and more effective claims management. This study reports on Insoore AI, an insurtech solution that aims to automate a portion of claims management by integrating a computer vision solution based on some latest developments in deep learning to automatically recognize and localize car damage from user-provided pictures.

Analysis of Accounting Information System on the Operational Implementation of Sales of Services and Insurance Claims at PT Asuransi Jiwa Manulife Indonesia

This study was made with the aim of finding out the accounting information system in the operational implementation of service sales and insurance claims at PT Asuransi Jiwa Manulife Indonesia. The research method chosen is a type of qualitative research using an approach and described descriptively. The resource persons obtained from several parties were branch administration employees, one of the customers and branch leaders by collecting data through interviews and observations. The problems with PT Asuransi Jiwa Manulife Indonesia are that server services on the website often have errors when uploading documents so that they can hinder operations, too many applications are used so that they cannot be integrated properly, the understanding of insurance products in agents is still low, the recording of accounting information systems is manual so that it is prone to errors when entering report data, Many customers complained about the claim fund disbursement process which took a long time. Based on this problem, the author provides a solution for the company to collaborate with the IT team to create an application or website that becomes a unit so that it can be easily accessed by customers and all agents at PT Asuransi Jiwa Manulife Indonesia.

Psychological dynamics of unit-linked insurance product decision-making: a cognitive model

Psychological dynamics of unit-linked insurance product decision-making: a cognitive model

The Expected Impact of Applying the Insurance Contracts Standard (IFRS 17) in the Solvency and Profitability of Insurance Companies listed on the Amman Stock Exchange

This study aimed to identify the expected impact of applying International Financial Reporting Standard No. 17 on the solvency and profitability of the insurance companies listed on the Amman Stock Exchange. The descriptive analytical approach was used to achieve the study's aim. The study used the questionnaire as a tool, where the study population consisted of all insurance companies listed on the Amman Stock Exchange. In contrast, the study sample included heads of accounts departments and actuaries working in insurance companies and accountants, and 33 questionnaires were distributed to insurance companies. One of the most important findings of this study was that there is a relationship between the independent variable (application of IFRS No. 17) and the dependent variable (solvency) in the insurance companies listed on the Amman Stock Exchange. And that there is a relationship between the independent variable (application of International Financial Reporting Standard No. 17) and the dependent variable (profitability) in the financial and service insurance companies listed on the Amman Stock Exchange. One of the most important recommendations of the study is the need for insurance companies to be keen to provide employees with ongoing experimental courses to remove the ambiguity surrounding some of the provisions of International Financial Reporting Standard No. 17.

Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate

North Atlantic hurricanes are a major driver of property losses in the United States and a critical peril for the reinsurance industry globally. We leverage insurance loss data and stochastic modeling to investigate the impacts of projected changes in hurricane climatology on the insurance industry, for +2 °C and +4 °C warming scenarios. We find that, relative to the historical baseline 1950-2022, expected changes in wind speed and rainfall may increase hurricane losses by 5% −15% (+2 °C) and 10% − 30% (+4 °C), with greater impacts at lower return periods than in the tail. The historical 100-year loss event may therefore be exceeded on average every 80 years (+2 °C) and 70 years (+4 °C). The expected changes in average annual loss are projected to be 10% (+2 °C) and 15% (+4 °C), with the largest relative increase attributable to precipitation-induced losses. Under the extreme SSP5-8.5 scenario, the expected loss inflation due to climate change is thus on the order of 0.5% per annum.

Birthing positions and mother`s satisfaction with childbirth: a cross-sectional study on the relevance of self determination.

Considering the inconclusive evidence regarding the clinical benefits of specific birthing positions, emphasis has been placed on adhering to women's preferences during the second stage of labour. Therefore, the present study aimed to assess the association between birthing position, the freedom to choose a birth position during the second stage of labour, and women's subjective satisfaction with childbirth. We performed a cross-sectional survey of women 8 or 12months after a vaginal birth in a hospital. The women were recruited via two cooperating health insurance companies. Multivariate analyses were conducted to assess the strength of the association between birthing position and maternal satisfaction with childbirth, with a particular focus on interactions with self-determination. In total, the data from 761 women were analysed. The supine position was the most frequently reported birthing position in the second stage of labour at 77.5%. Notably, 39.0% and 30.5% of the women who gave birth in the dorsal and lateral supine positions, respectively, stated that the birth position was not chosen voluntarily. The regression models show a significant negative association between supine birthing position and satisfaction with childbirth, which is significantly related to self-determination. The most common reason for the adoption of a specific birthing position was instructions from medical staff. The data provide insight into the perceived satisfaction with childbirth depending on the birthing position, whereby the relevance of self-determination is particularly evident. At the same time, self-determination is often not given, which is associated with reduced birth satisfaction.

Extension of CARAMEL Model by Customer Satisfaction Factor for Indian Private Life Insurance Companies in India

This paper explores the efficiency of private life insurance companies in India. The study employed the CARAMEL model to gauge the technical proficiency of Indian life insurance providers. However, the CARAMEL model has ignored the customer satisfaction factor, which is nowadays an essential factor for measuring efficiency. So, in this study, the CARAMEL model is extended by another factor: customer satisfaction. Customer satisfaction is measured by the persistency ratio, claim settlement ratio, and number of grievances reported. Compare the ranks of private life insurance companies according to the CARAMEL model without customer satisfaction score and with customer satisfaction score. Correlation coefficient and t-test was used to find out whether there is any significant association between the ranks according to the CARAMEL model without customer satisfaction and with the customer satisfaction factor. The data used in this study, which spans the last ten years from 2013-14 to 2022-23, was entirely secondary and was gathered from the IRDA official website. Ageas Federal Life Insurance Company ranked 1st according to CARAMEL model without customer satisfaction and ICICI Prudential Life Insurance Company ranked 1 with customer satisfaction factor. Spearman’s Rank correlation coefficient shows that there is an insignificant association between the CARAMEL model ranks with customer satisfaction and without customer satisfaction factors. When there is no significant association between ranking without customer satisfaction factors and with customer satisfaction factors, we extend the CARAMEL model by the customer satisfaction factor.

The risk screening effect of digital insurance distribution

AbstractExtant research holds that digital sales channels advance competition and service or goods availability but rarely details the attendant information asymmetry. Leveraging a large unique dataset, this study examines a specific case in which consumers have a choice between offline and digital channels for insurance purchases. We find that digital channels screen in consumers with lower unobserved risk. For term life, endowment and disease insurance products, the average risks of the policies purchased through digital channels were significantly lower than those purchased offline after controlling for all observed risk characteristics. This risk screening effect mainly comes from the inclusion of new low‐risk enrollees. As a consequence, digital channels exhibit lower information asymmetry and greater profitability compared to offline channels.

Optimized Investment Strategy and Proportional Reinsurance of Insurance Company under Ornstein–Uhlenbeck and Geometric Brownian motion Models

Optimized Investment Strategy and Proportional Reinsurance of Insurance Company under Ornstein–Uhlenbeck and Geometric Brownian motion Models

The equilibrium strategy of insurance companies’ dividends and reinsurance games

We investigated the optimal risk management strategies of an insurance company within a two-player non-cooperative differential game framework. The key feature of this model is considering the company’s surplus as a strategic variable to make the insurance company more attractive to shareholders. In this setup, shareholders are participants who demand a share of the surplus, while managers are participants concerned with the risk management of the surplus. The objective of the shareholders is to maximize the expected discounted dividends. We address this asymmetric game under two different assumptions about the managers’ objectives: in the first scenario, the managers aim to minimize the probability of bankruptcy; in the second scenario, the managers aim to maximize the expected discounted utility derived from the surplus.

Unveiling Dynamics: Financial Performance Determinants in the Ghanaian Insurance Industry

This pioneering study unravels the financial performance dynamics of Ghanaian insurance firms, leveraging proprietary data from the National Insurance Company (NIC), Ghana. Utilizing a system GMM technique on a comprehensive panel dataset of 40 firms from 2012-2017, it uncovers cost efficiency, claims ratio, retention ratio, audit fees, firm age and size, and board composition as crucial performance drivers. In what concerns the implications for the emerging economies, we show that the inclusion of the variable “risk retention and claims” helps insurance companies to better ascertain the right level of risks associated with the businesses they underwrite, so that the claims ratio will be minimized, and the appropriate premium ensured. Moreover, for the insurance sector in the frontier markets, with characteristics like Ghana´s economy, the study advocates for strategic cost control measures and emphasizes the need for proactive regulatory approaches aiming to enhance policy actions and to provide supplementary funds for firms demonstrating growth potential. These empirical evidence-based insights help design a roadmap for developing the insurance sector in the economies belonging to frontier and emerging markets.

Exciting Times are Ahead - Gaussian Views and Yield Curve Extrapolation

In the insurance industry, products having a much longer time to maturity and yield values for up to 100 years need to be modeled. J�rg Kienitz and Leenesh Moodliyar propose to apply Gaussian Process Regression (GPR) for the extrapolation. The method is compared to two market standard methods � the Nelson-Siegel-Svensson (NSS) and the Smith-Wilson (SW) methods