Non-life Insurance Business Research Articles

Effect of Information Provision of Cost Fire Insurance Claim on the Gross Claims of Non-Life Insurance Business in Nigeria

Effect of Information Provision of Cost Fire Insurance Claim on the Gross Claims of Non-Life Insurance Business in Nigeria

Employer’s Liability Insurance Portfolio and the Gross Income of Non-Life Insurance Business: A Case of Nigeria

Employer’s Liability Insurance Portfolio and the Gross Income of Non-Life Insurance Business: A Case of Nigeria

AN EVALUATION OF EVOLUTION OF HEALTH INSURANCE SEGMENT IN THE INDIAN NON-LIFE INSURANCE SECTOR BETWEEN THE YEARS 2010 & 2020

Health insurance in India has been growing consistently and positively, unlike other lines of non-life insurance business. In this article, to know how the health insurance segment outshines other segments of non-life insurance sector three measures are calculated. Firstly, the Compounded Annual Growth Rate (CAGR) was calculated to determine the pace of growth. Secondly, Health insurance penetration ratio was calculated to know whether the growth of the health premium commensurate with the GDP of the country. Finally, taking the changes in the proportion of trade among the segments of the non-life insurance sector, the Norm of Absolute Values Index was found out to substantiate the structural change taking place in the insurance industry. The results of these three measures highlight the impressive growth in the Health insurance which seems to continue to dictate the structure of non-life insurance industry in India. KEY WORDS: Health insurance, Compounded Annual Growth Rate, Norm of Absolute Values Index, Health insurance penetration ratio, standalone health insurers

Evaluation of Target Deposit Insurance Fund Based on Credit Migration Approach for the Non-Life Insurance Sector in Korea

Purpose: In the case of non-life insurance business, the rate for the accumulation of fund in non-life insurance has fallen every year, making it difficult to reach the target fund level. Thus, we evaluate the appropriate target fund level for non-life insurers. Design/methodology/approach: The portfolio of the deposit insurer was constructed for 21 non-life insurers which were licensed non-life insurance businesses under the Insurance Business Act 4 (1) in Korea. We attempt to analyze the default probability using the Credit Migration method rather than the Merton. We derive the joint distribution for change in credit ratings and a loss distribution of the deposit insurer in non-life insurance sector by performing the Monte-Carlo simulation. The average value of the worst loss with a 0.5% probability in the loss distribution, TVaR99.5%, was adopted as an appropriate target fund level. Findings: The value of TVaR99.5% in this study was between 67 billion won and 2.434 trillion won. This amount of money is from 4.71% to 171.71% of the current deposit insurance fund for non-life insurers, and from 4.06% to 147.52% of the target fund level for non-life insurers. However, if a rather extremely conservative case that reflects the loss of deposit insurance funds due to the bankruptcy of up to 7 insurers among non-life insurers that consists of the portfolio is excluded, the distribution of the TVaR99.5% was between 67 billion won and 402 billion won. This money is from 4.71% to 28.28% of the current deposit insurance fund, and from 4.06% to 24.37% of the target fund level for non-life insurers. These results indicate that additional funding is unnecessary because the current level of deposit insurance funds will sufficiently cover future losses. Research limitations/implications: The limitation of this study is to evaluate the deposit fund under the RBC system, since it is controversial whether the RBC system adequately reflects the risk of non-life insurers. The risk of minimum guaranteed interest rate, catastrophe risk and liquidity risk are needed to be considered through further study. In particular, comparing the loss distribution for individual insurers under Solvency II and the RBC system is a future task of research. Originality/value: This study contributes to the evaluation of the target deposit insurance fund for non-life insurers by applying the credit migration method unlike the existing studies. This attempt is meaningful in that it provides an objective and practically easy-to-use alternative to the market participants such as the deposit insurer and non-life insurers.

Effect of Human Capital on Productivity of Non-Life Insurance Line: Evidence from Ethiopian Insurance Corporation

The purpose of this study was to examine the impact of human capital on productivity of Non-life insurance business in Ethiopia with special reference to Ethiopian Insurance Corporation. The study adopted mixed type of research approach with arrangement of primary data collection via a cross-sectional survey questionnaire and secondary data from financial statement of Ethiopian non-life insurance business. The sample of this study was 95 employees of determined by Yamane’s formula and selected using simple random sampling technique. The questionnaires were distributed to 82 employees of EIC and only 60 were completed and returned . The study used regression analysis technique and used STATA software package . The study finding revealed that human capital is positively and significantly affecting productivity in Ethiopian Insurance corporation. Therefore, the study recommends that an Ethiopian Insurance corporation should understand and develop better mechanism in this regard to increase productivity in the company. Keywords: Insurance, Human capital, Non-life insurance, Productivity DOI: 10.7176/EJBM/13-9-04 Publication date: May 31 st 2021

Factors Affecting the Core Competencies of Salesmanship in the Non-Life Insurance Business

Factors Affecting the Core Competencies of Salesmanship in the Non-Life Insurance Business

A brief study on Principles of Separating Life and Non-life Insurance Business

보험회사는 생명보험과 손해보험을 인수하고 그 보험계약을 이행하는 생명보험업과 손해보험업을 영위한다. 하나의 금융회사가 다른 금융업을 수행하는 금융업 겸업만큼이나 하나의 보험회사 내부에서 생명보험업과 손해보험업을 겸영할 수 있는지 문제된다. 생명보험과 손해보험은 서로 담보하는 위험이 본질적으로 다르므로 보험회사가 해당 보험을 인수함에 따른 리스크도 다르다. 이러한 점에서 하나의 보험회사가 생명보험과 손해보험을 한꺼번에 인수하여 얻을 수 있는 경제적 효과 보다 리스크 전이, 그리고 그로 인한 보험회사의 파산 가능성 등의 문제가 더 크다고 볼 수 있으므로, 이를 예방하고 보험계약자를 보호하기 위해 생명보험업과 손해보험업 겸영금지 원칙(이하 ‘생손보겸영금지원칙’이라고 한다)이 도출된다. 우리나라는 1962년 보험업법 제정시부터 보험업법 제10조에 생손보겸영금지원칙을 명시하였다. 이후 금융감독당국은 정책적 필요와 생손보업계의 합의를 통해 생손보겸영금지원칙에 대한 예외를 정하였고, 이러한 예외를 더 넓혀야하는지에 대하여는 논란이 있다. 생손보겸영금지원칙은 하나의 보험회사 내에서 생명보험과 손해보험을 함께 영위하는 것을 금지하므로, 지주회사 내에서 생명보험회사 또는 손해보험회사를 자회사로 보유하는 것은 생손보겸영금지원칙에 위반되지 않는다. 따라서 지주회사를 통해 생명보험과 손해보험을 융합한 보험상품을 개발하는 등 생손보겸영을 통해 추구할 수 있는 효과를 누릴 수 있을 것으로 볼 수 있다. 다만, 지주회사 방식을 활성화하기 위해, 금융지주회사법에 대한 입법적 개선방안을 검토할 필요가 있다. 이에 본 논문에서는 관련 이론과 해외 입법례와의 비교법적 고찰을 바탕으로, 생손보겸영금지원칙에 관하여 제기되는 논점을 정리하고 입법적 개선방안을 검토하고자 한다.

Determinante profitabilnosti neživotnih osiguravajućih kompanija u Srbiji

Taking into account the specifics of the Serbian insurance market, the insurance sector in Serbia is still underdeveloped and, if we take the degree of development into account, it is well below the average for European Union member states. The insurance market in Serbia is developing and has great potential opportunities. Profitability is one of the most important goals of financial management. The aim of this research is to examine the impact of internal factors of non-life insurance business operations such as: asset size (company), asset growth, premium growth, liquidity ratio, debt ratio, underwriting risk, operating costs, financial leverage, and total revenues of the profitability of non-life insurance companies in Serbia. The results of the research were obtained using the multilinear regression model, where the representativeness of the model was tested by calculating the coefficient of correlation, the determination coefficient and the corrected determination coefficient. Also, a variance analysis (ANOVA) was carried out, in order to test the significance of the observed variables in the model and examine the impact of these independent variables on ROA profitability as a dependent variable. The fundamental results are placed on giving an empirical basis for reaching the conclusion that the greatest impact on the profitability of non-life insurance companies is exerted by the increase in premiums, the debt ratio, operating costs and the share of profit in total revenues.

Insurance business synergies, economic growth and strategic planning

Previous research has found that life and non-life insurance business share significant relationships with economic growth. This current study extends that literature by being the first to investigate the synergistic relationship life and non-life insurance activities share with economic growth. We collect data that includes 84 national markets representing a broad spectrum of economic development over the 1994-2012 period and employ system-generalised method of moment (GMM) estimation technique based on a dynamic model structure. Our results support the hypothesis that life and non-life insurance synergies share a positive relationship with economic growth and that positive relationship experiences diminishing marginal returns as the insurance markets mature. The results of our study provide implications for policymakers with regard to market liberalisation strategies, as well as implications for the management of insurance companies contemplating foreign market expansion strategies.

Determinants of business performance of non-life insurance companies in Serbia

The possibilities for growth of the insurance sector and its contribution to the development of the national economy are conditioned by business performance of insurance companies. This paper presents results of the assessment of performance of companies engaged in non-life insurance business in Serbia. Empirical research was conducted on the basis of financial statements of non-life and composite insurers during the period 2006-2013 by using CARMEL indicators and multiple regression analysis. The estimated model with individual fixed effects on panel data indicates a significant and negative influence of the combined ratio, financial leverage and retention rate on the profitability of non-life insurers, as measured by the return on assets (ROA), while the influence of the written premium growth rate, return on investment and company size is significant and positive. Conducted research enriches the information basis for the creation of business strategy and formulation of business policy of non-life insurers in Serbia.

Establishment of Nonlife Insurance Business Navigation System A-NIBNS

In this study, the authors teamed up with nonlife insurance companies and agencies to create a business approach method that made it possible to reform insurance-related business activities from a policyholder perspective. A detailed operational method was then put together as A-NIPNS, or Amalabs Nonlife Insurance Business Navigation System. The system is comprised of four parts: (1) a networking system for sharing information within nonlife insurance companies and with agencies, (2) a customer handling evaluation system, (3) a business information sharing system used to link nonlife insurance companies and agencies, and (4) a complaint utilization system for policyholders. After putting together the system, the authors implemented a trial operation using Nonlife Insurance Company A and Nonlife Insurance Agency B in order to check its effectiveness.

Kötelező gépjármű-felelősségbiztosítás rövid története és alapvető jellemzői

Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is ofspecial importance for European citizens, whether they are policyholders or victims of anaccident. It is also a major concern for insurance undertakings as it constitutes an importantpart of non-life insurance business in the Community. Motor insurance also has an impact onthe free movement of persons and vehicles. The first part of the study deals with the originand the brief history of insurance, beginning with the ancient Rome. The second part tries todescribe the main characteristic features of the motor insurance including its legalbackground – with respect to the directives of the European Parliament and the Council, andthe Hungarian legislation –, its subjects, the conclusion and termination of the contract.

Impact of Privatization on Productivity: A Non-Parametric Analysis of Indian Insurance Sector

The insurance sector was opened up for private participation on the ground that the interests of the consumers would be better served if there is competition among the insurers, which will ultimately increase productivity of the sector as a whole. The main objective of this article is to analyze the productivity changes of Indian life and non-life insurance business with the application of non-parametric Malmquist indices. Therefore, this study uses ‘expenses related to labour’ ( x1), ‘expenses related to business service and materials’ ( x2) and ‘total investment’ ( x3) as major three inputs; and following the ‘intermediation approach’ and the ‘value-added approach’, this study uses ‘premiums earned’ ( y1) as the output for risk bearing/risk pooling service following the value-added approach and ‘income from investment’ ( y2) as the intermediation output. From the productivity analysis we found that, during the study period (2005–2006 to 2009–2010) total factor productivity decreased in life insurance business but it increased in case of non-life insurance business with different reason behind the change. We can also conclude in overall factor productivity analysis excluding public sector insurers; though the public sector insurers are significantly older in the market but it has an unfavourable impact on the insurance market in terms of factor productivity and technological progress.

Efficiency of Non-Life Insurance Business in Kenya: Stochastic Frontier Approach

The study investigates the efficiency of nonlife insurance business in Kenya over the period 2006-2012 using stochastic frontier approach and establishes an industry efficiency of 72% over the period. The efficiency scores per year were; 2006 (67%), 2007 (69%), 2008 (61%), 2009 (73%), 2010 (99%), 2011 (73%) and 2012 (69%). Small and medium scale firms are catching up with large scale firms in terms of efficiency. Branch network and county coverage positively influence efficiency. Firms with 21-30 years of age are the most efficient cohort. There is no significant difference in efficiency between specialized nonlife and composite, domestic and foreign owned firms and between firms with regional and national underwriting orientation. Elasticity of the sum of net earned premiums and investment income to changes in commissions expenditure, management expenses and capital ranged between (0.2-0.6), (0.2-0.5) and (0.1-0.3) respectively, over the period. Deviations in profitability and claims paid across firms are wide translating to industry potential for cross-firm reinsurance. The profitability is positively correlated with claims paid across firms indicating sustained industry capacity to settle claims. In order to increase efficiency competitiveness firms should continue expanding their branch network and county coverage across Kenya, increase capitalization and innovate on investment portfolio. Deviations in profitability and underwriting risk across firms point to merging of firms, formation of strong cross-firm reinsurance ties, increasing of insurance penetration and investment returns, and enhancing client risk profiling and customer education on risk prevention as critical strategies towards increasing industry stability and sharing of claims settlement responsibilities.

Efficiency of Non-Life Insurance Business in Kenya Stochastic Frontier Approach

Efficiency of Non-Life Insurance Business in Kenya Stochastic Frontier Approach

Level of Morale among the Personnel in Oriental Insurance Company Limited: A Study of Regional Offices in Punjab and Haryana

The Oriental Fire General Insurance Company Limited was setup at Bombay on 12 September 1947. To reflect the gamut of the operations of the company, the name of the company was changed in May 1984 from ‘The Oriental Fire and General Insurance Company Limited’ to ‘The Oriental Insurance Company Limited’ (OICL), and at present the OICL is a public sector company. It deals in all kinds of non-life insurance business. Morale represents a composite of feelings, attitudes and sentiments that contribute to general feelings of satisfaction. It is a state of mind and spirit affecting willingness to work, which in turn affects organisational and individual objectives. The objective of the study is to analyse the level of morale among the employees of the OICL and to provide suitable suggestions for the improvement of practices adopted by the company to enhance the morale of its personnel.

EVA/RAROC vs. MCEV Earnings: A Unification Approach

This paper compares different performance metrics used for value-based management in life and non-life insurance business. The goal is to find a consistent basis for performance measurement at the insurance group level. This is important since management techniques used in non-life insurance, such as economic value added and risk-adjusted return on capital, are at first sight very different from those used in life insurance, that is, an analysis of market-consistent embedded value earnings, thus making management difficult at the group level. This paper aims to compare and contrast these concepts and to show that all approaches can be unified under a single consistent framework, and that all present residual cash flow concepts that can be linked under the residual income valuation theory.

Modeling Claim Sizes In Personal Line Non-Life Insurance

This paper uses claims data from the most prominent lines of non-life insurance business in Nigeria to determine appropriate models for claim amounts by fitting theoretical distributions to the various data. The risk premiums for each class of business are also estimated. The result of the study demonstrates that some lines of business are indeed better modeled with different distributions than had earlier been conjectured.

On Modeling Diversification Benefits in Insurance Portfolios--An Australian Perspective

Empirical measurement of dependency between different lines of non-life insurance business remains an open problem. International regulatory requirements and accounting standards are moving towards increased disclosure of the variability of insurance liabilities. In estimating the variability, it is required to take diversification benefits into account, as it is generally believed that different lines of business are not perfectly dependent on one another. Due to data limitations and the complicated nature of non-life insurance business, however, direct quantification of dependency and so diversification benefits between individual lines is a difficult task. In this article, we set forth some practical considerations in modeling dependency and diversification benefits under Australian regulatory environment. We start with providing a summary of the underlying factors causing dependency and examining the reasonableness of some industry correlation figures based on these factors. We also study the correlations between the historical loss ratios of several lines of Australian business. Afterward we carry out extensive simulation studies to investigate the effects of applying some recently suggested methodologies for tackling the problem of evaluating diversification benefits.

A Robustification of the Chain-Ladder Method

In a non-life insurance business an insurer often needs to build up a reserve to able to meet his or her future obligations arising from incurred but not reported completely claims. To forecast these claims reserves, a simple but generally accepted algorithm is the classical chain-ladder method. Recent research essentially focused on the underlying model for the claims reserves to come to appropriate bounds for the estimates of future claims reserves. Our research concentrates on scenarios with outlying data. On closer examination it is demonstrated that the forecasts for future claims reserves are very dependent on outlying observations. The paper focuses on two approaches to robustify the chain-ladder method: the first method detects and adjusts the outlying values, whereas the second method is based on a robust generalized linear model technique. In this way insurers will be able to find a reserve that is similar to the reserve they would have found if the data contained no outliers. Because the robust method flags the outliers, it is possible to examine these observations for further examination. For obtaining the corresponding standard errors the bootstrapping technique is applied. The robust chain-ladder method is applied to several run-off triangles with and without outliers, showing its excellent performance.