Non-life Insurance Market Research Articles

Factors Influencing Underwriting Performance of the Life and Non-Life Insurance Markets in South Africa: Exploring for Complementarities, Nonlinearities, and Thresholds

ABSTRACT Underwriting is crucial for insurers’ performance and sustainability, yet empirical evidence on factors influencing its performance has received limited attention. Therefore, this study investigates this phenomenon considering South Africa’s life and non-life insurance sectors between 2013–2019. Using the generalized method of moments and the bootstrap quantile regression techniques for analysis, the findings show that insurance size, market share, and investment income significantly and positively impact underwriting performance. However, premium growth weakens the underwriting performance of both sectors. Also, non-life insurance shows a positive relationship for reinsurance, while life insurers present an inverse relationship. Underwriting risk negatively impacts non-life performance across quantiles, while life insurer risk was negative in higher quantiles. More so, initial solvency levels weaken underwriting performance, while extreme increase improves it, implying a direct U-shaped relationship. Hence, highly solvent insurers are more likely to succeed in underwriting operations. Additionally, market share complements return on assets in promoting underwriting performance. Policy recommendations are discussed.

Growth of Life and Non-life Insurance Market in India

In the midst of high cost of health care both at the macro and micro levels, health insurance becomes a viable alternative for financing health care in India. Health insurance is fast emerging as an important mechanism to finance health care needs of the people. The insurance industry in India has witnessed an impressive growth rate over the last two decades driven by the greater private sector participation and an improvement in distribution capabilities, along with substantial improvements in operational efficiencies. The paper presents the growth of life and non-life health insurance in India

The impact of the systemic competitiveness of the economies of the Visegrad Group countries on the development of their non-life insurance markets in 2004–2020

The aim of the article is to assess the impact of selected factors of systemic competitiveness of the Visegrad Group economies on the development of their non-life insurance markets in 2004–2020. The study analyzes the literature on the subject, as well as the methods of descriptive statistics and econometric analysis, for the needs of which synthetic indicators of the development of non-life insurance markets of the analyzed countries were constructed. Based on the conducted research, it was found that Poland’s position within the Visegrad Group in terms of the development of the non-life insurance market was leading, despite the fact that the Czech Republic was characterized by the highest level of systemic competitiveness. Moreover, there were similarities between the markets of both countries. They were shaped in a positive, statistically significant way by the same components of systemic competitiveness (property rights and freedom of the labor market). The next places were taken by the Hungarian and Slovak markets. Keywords

Studying the relation between efficiency and profitability in the non-life insurance market

Previous literature on business performance in the insurance market tends to focus only on efficiency or profitability. However, the relationship between both has yet to be addressed in the Spanish insurance market. This paper examines the relationship between efficiency scores obtained through a two-stage DEA and the values of the classical financial ratios (ROE, ROA, Technical Ratio, Combined Ratio and Loss Ratio). We use a sample of 111 firms from the non-life Spanish insurance market from 2008-2017. We find a positive relationship between efficiency and profitability, which shows decreasing returns, with the positive effect of efficiency on profit ratios being lower for the most efficient companies.

The Life and Non-Life Insurance Market in the European Union

The article discussed on the situation of the life and non-life insurance market in the European Union as seen at the end of 2022. The market analysis was based on data derived from the European Insurance and Occupational Pensions Authority (EIOPA) and the Organization for Economic Cooperation and Development (OECD) and included such factors as the number of insurers, the division into life insurance and non-life insurance, and the key market indicators (written premium, density and penetration rates, and concentration index). The collected data shows the life and non-life insurance market in 27 European Union Member States. The largest number of insurers is in the French, German and Luxembourg markets, the smallest in the Slovak, Estonian, Lithuanian and Latvian markets. It was noted that the more insurers sell insurance in a country, the lower the concentration ratio. Germany and France had the largest share of the global business insurance market in 2022 from EU countries. Overall, EU residents in 2022 spent more on life insurance (€652.2 billion) compared to non-life insurance (€495.2 billion). Residents of EU countries spend most of their life insurance money on index-linked and unit-linked insurance and insurance with profit participation. The largest share of EU residents’ non-life insurance spending is in: Fire and other damage to property insurance, Motor vehicle liability insurance and Other motor insurance. Just as these countries differ significantly in economic terms, they also do so from the life and non-life insurance market standpoint.

АНАЛІТИЧНИЙ ОГЛЯД СУЧАСНОГО СТАНУ СТРАХОВОГО РИНКУ УКРАЇНИ

The article is devoted to an analytical review of the current state of the insurance market of Ukraine. An effectively functioning insurance market is an integral part of the country's market economy. In times of wide range of risks as well as uncertainty, insurance companies must provide proven insurance protection to legal entities and individuals to facilitate their efficient functioning and ensure their confidence in the future. The stability and reliability of insurance companies is a very important prerequisite for their survival and a guarantee that their missions and strategic goals will be successfully implemented The article reviews the results of the activities of the main companies in the insurance market of Ukraine. It was established that as of June 30, 2022, the total amount of insurers' assets compared to the beginning of the year (before the military aggression) almost did not change (+2.2%) and amounted to UAH 65.7 billion. At the same time, during the specified period, the number of insurers decreased - from 155 (January 1, 2022) to 142 (July 1, 2022). In general, the composition of market participants working in the life insurance segment in Ukraine has not changed. In recent months, the insurance market has demonstrated a recovery in activity indicators compared to the first shock month of the war, operational and management processes are gradually being adjusted, and the decline in indicators is reducing. On average, the volume of the non-life insurance market decreased by 25% compared to 40-50% in the first months of the military aggression, while the decline in the volume of insurance payments remains commensurate (-26%). It was concluded that in order to maintain the positive trends that have formed in the market, the National Bank of Ukraine will monitor the insurers' compliance with the requirements for proper and timely disclosure of information about their financial status, mandatory financial standards, as well as the insurers' proper fulfillment of their obligations under concluded contracts insurance.

Development of the Polish non-life insurance market and macroeconomic stabilization of the Polish economy in 2000-2020

The paper presents the results of research on the relationship between the deve-lopment of the Polish non-life insurance market and macroeconomic stability of the Polish economy in 2000-2020. The research was based on The Method of Zero Unitarization (construction of a synthetic indicator of the Polish non-life insurance market development), the Pentagon of Macroeconomic Stabilization and a cross-correlogram (study of the relationship between the two variables).

Determinants of Croatian Non-Life Insurance Companies’ Efficiency

Although a relatively large number of studies have been focused on evaluating the efficiency of insurance companies from different aspects, analysis of factors that determine the achieved level of insurers’ efficiency is still in their inception. While these studies primarily encompass insurance companies operating in developed insurance markets, such research based on the sample of Croatian non-life insurers does not exist. Therefore, this paper is focused on the efficiency drivers of the insurance companies that operate in the Croatian non-life insurance market. The research is based on data for 18 insurance companies in the period from 2009 to 2021. Applying Data envelopment analysis (DEA) and Truncated regression, the research results show that age and ownership influence the efficiency of non-life insurance companies in Croatia, while the companies’ size, leverage, and product diversification are not confirmed as significant determinants of the efficiency.

Razvoj kasko osiguranja motornih vozila u Srbiji 2000-2020

The beginning of the 21st century was marked as the era of automobiles. The slogan "An automobile is a luxury" has been replaced by a new one, "An automobile is not a luxury, but a necessary means of transport". After 100 years, an automobile went from being a luxury item to an optimal means of transport. Today, it is hard to imagine life without automobiles. A motor vehicle enables easier and faster reaching any point in a city, a country, a continent and even another continent. Transport by an automobile, as one type of land transport, is the most widespread and takes a leading position in transport of passengers, goods and various types of cargo over different distances. In addition to the convenience, an automobile is also a cause of various types of accidents. Due to its nature and method of use, it can cause damage both to itself and to another automobile, a driver, a passenger, a pedestrian, but also to a third person and/or his/her property. Due to such losses, it is convenient and important to offer several insurance lines, among which motor hull insurance is one of the most common insurance lines. The aim of the paper is to show a long-term development of motor hull insurance and determine its place, role and significance in non-life insurance market in our country. The analysis includes the most important insurance categories, starting with market participants and insurance acquisition, through claims and technical reserves, to ratios. The focus is on a more detailed digital presentation of those insurance categories because numbers, in any case, reflect the issues that are the subject of this paper more precisely and more objectively than any text, with a greater possibility for a reader to make his/her own analyses and conclusions. In addition to motor hull insurance analysis, the average annual share of acquisition, claims and technical reserves of five largest non-life insurance lines will also be presented.

An analysis of insurance penetration and insurance density in India

The insurance industry offers both domestic and international investors several business prospects. India is ranked 11th largest life insurance and 14th non-life insurance market globally. This article is based on two well-known characteristics that analyse a country's insurance sector's growth and development. Insurance Penetration and Insurance Density are the two metrics in question. Insurance Penetration is the ratio of insurance premium to gross domestic product (GDP) in percentage terms. Insurance density is measured as a ratio of insurance premium to population. This study is based on the secondary data collected from the annual reports of the Insurance Regulatory and Development Authority of India (IRDAI). The study covers data from 2014–15 to 2020–21. The insurance penetration and density are separately collected for life, non-life and industry. The study has used Mean, median, variance and standard deviation,, t-test analysis, correlation and ANOVA for understanding the difference and relationship in the life and non-life categories on the parameters of Insurance Penetration and Insurance Density.

Impact of Economic Factors on Life and Non- Life Insurance Development in Albania – A VECM Analysis

This paper intends to explore the economic factors which stimulate the demand for insurance products in Albania due to the fact that insurance industry has a significant effect on the economic development of a country. Albania is a developing country and insurance market has progressed moderately. Considering density insurance as a proxy of life and non-life insurance market development, the authors have examined the economic determinants of the Albanian insurance market during the period of 2009-2020 based on quarterly data. The analysis is performed using Vector Error Correction Model designing separate models for each of the insurance segments: life and non-life ones. Among several economic variables, this paper examines the effect of GDP, inflation, real interest rate and unemployment. According to the empirical results, GDP per capita has the most significant impact while unemployment is found to be insignificant in respect to life and non-life insurance density. The results are mostly in accordance with the empirical research work, and they are valuable to both academics and experts in insurance industry. The paper contributes to the existing international literature, especially to the literature related to developing countries, being the first one investigating the influence of a set of economic factors on life and non-life insurance industry in Albania. On the other hand, the results of the paper suggest that insurance companies monitor should evaluate these factors in order to increase and improve insurance service available to the public.

Retail financial markets as a driver for the development of financial sector

The paper analyzes the influence of the dynamics of retail financial markets on the development of financial sector on the annual data for 39 countries, including developed and developing economies, for the period 1990—2018. To assess the general dynamics of retail markets development, a composite indicator was built. This indicator is included in the models for corporate lending market, stock market and non-life insurance market. The results show that, on the one hand, the development of retail markets (households credit market, life insurance market and private pension funds) stimulates the development of non-retail financial markets (corporate lending market, stock market and non-life insurance market) due to the expansion of their resources. On the other hand, overheating of retail credit market has a negative impact on the stability of the banking sector and subsequently leads to a reduction in the size of the corporate credit market, and the excessively rapid growth of life insurance market may hinder the development of its other segments.

On a Markovian Game Model for Competitive Insurance Pricing

In this paper, we extend the non-cooperative one-period game of Dutang et al. (Journal of Operational Research 231(3):702–711, 2013) to model a non-life insurance market over several periods by considering the repeated (one-period) game. Using Markov chain methodology, we derive general properties of insurer portfolio sizes given a price vector. In the case of a regulated market (identical premium), we are able to obtain convergence measures of long run market shares. We also investigate the consequences of the deviation of one player from this regulated market. Finally, we provide some insights of long-term patterns of the repeated game as well as numerical illustrations of leadership and ruin probabilities.

Measuring Total Factor Productivity of China Provincial Non-Life Insurance Market: A DEA-Malmquist Index Method

The unbalanced economic development results in the difference in operating efficiency of the non-life insurance industry in China’s provinces; based on the DEA-Malmquist index method, this paper investigates the provincial differences, dynamic change characteristics, and causes of non-life insurance productivity in 31 provinces of China from 2004 to 2017. The results show that in the sample period, there are significant differences between provinces and regions in China’s non-life insurance efficiency, which generally shows the echelon spatial characteristics of “strong in the west and weak in the east”. Technological progress in the western region promotes the rapid growth of total factor productivity, while the low efficiency of technological progress in the eastern region restrains the improvement of total factor productivity. The overall total factor productivity of China’s provincial non-life insurance industry is on the rise, mainly due to the improvement of pure technical efficiency and scale efficiency, while technological progress has an inhibiting effect on the contrary. These conclusions are of reference value for relevant stakeholders in China’s provincial non-life insurance market to formulate development strategies and business strategies.

Reflections on the Customer Decision-Making Process in the Digital Insurance Platforms: An Empirical Study of the Baltic Market

Multifold effects of the COVID-19 global health crisis and economic lockdowns are reflected in the insurance industry, and are predicted to expand to the post-COVID-19 era. It is expected that, within a short period of time, the current worldwide situation, in regards to the coronavirus pandemic, will be reflected in new trends, regarding customer behavior, organizational management, and culture, as well as reveal improved business management models, legacy infrastructure, and service systems in insurance organizations. Here, a focus on end-user preferences, data, and their behavior modeling in digital platforms are major practical drivers within the modern insurance concept, but there is a paucity of researches within the theoretical synthesis of consumer decision-making (CDM) models, information system theories, and behavioral economics concerning modern insurance-specific value chains and digitalized decision-making processes. Therefore, the following research aims to expand upon the existing scientific knowledge of end-user behavioral patterns and process frameworks in the Baltic insurance market, by including and examining a factor group of technological enablers and a digital environment. Research results in digitalization, personalization, and customization levels within the Baltic non-life insurance market are homogenous with a leading position of Estonia and overall evaluations ranging between Satisfied and Rather Good. There are also three major factor groups and process stages identified, which influence insurance purchase decision-making in digital insurance platforms in the Baltic market.

Risk management and the cost of equity: evidence from the United Kingdom’s non-life insurance market

We investigate the effect of risk management (reinsurance) on the corporate cost of equity using panel data drawn from the United Kingdom’s (UK) non-life insurance industry. Our results show that use of reinsurance lowers the cost of equity but that the relation is non-linear. We find that the rate of reduction declines as the level of premiums ceded relative to total gross premiums written increases. We also find that the reinsurance-cost of equity relation is moderated by the risk of financial distress/bankruptcy. This moderating relation is robust to the use of three alternative measures of financial distress and bankruptcy risk.

Matrix Normal Cluster-Weighted Models

Finite mixtures of regressions with fixed covariates are a commonly used model-based clustering methodology to deal with regression data. However, they assume assignment independence, i.e., the allocation of data points to the clusters is made independently of the distribution of the covariates. To take into account the latter aspect, finite mixtures of regressions with random covariates, also known as cluster-weighted models (CWMs), have been proposed in the univariate and multivariate literature. In this paper, the CWM is extended to matrix data, e.g., those data where a set of variables are simultaneously observed at different time points or locations. Specifically, the cluster-specific marginal distribution of the covariates and the cluster-specific conditional distribution of the responses given the covariates are assumed to be matrix normal. Maximum likelihood parameter estimates are derived using an expectation-conditional maximization algorithm. Parameter recovery, classification assessment, and the capability of the Bayesian information criterion to detect the underlying groups are investigated using simulated data. Finally, two real data applications concerning educational indicators and the Italian non-life insurance market are presented.

Application of customisation and personalisation in digital solutions of the non-life insurance market: a case study of Lithuanian, Latvian and Estonian e-sales platforms

AbstractThe Baltic non-life insurance market has not only continued recording a dynamic premium growth in the past three years but also has shown a significant transition to digital technologies and solutions. Here, the development of customised insurance products and systems, assessment of claims, and creation of personalised customer experience can be considered best practices in the application of theoretical concepts and, accordingly, require continuous studies from a scientific point of view. Therefore, the following research aims to present an as-is status of existing solutions of digital insurance platforms in Baltic countries and to clarify their compatibility with customisation, personalisation, and value co-creation features at the practical product and functional levels. Accordingly, a case-study method following a combination of a descriptive embedded single-case design and the state-of-the-art method was applied in the analysis of the non-life insurance market, its e-channel environment, and platforms of three Baltic countries — Lithuania, Latvia, and Estonia. The multidimensional assessment matrix has been designed to present the results of the case study analysis on the practical product and functional levels. Research results refer to an assumption that ideas and methods of Mass Customisation and Mass Personalisation concepts, as well as their combination with digital solutions, penetrate the analysed part of the non-life insurance market in the Baltic countries and result in a mutually useful outcome for insurance companies and end-users. The paper contributes to further theoretical investigation of digitalisation and digital transformation of the non-life insurance market in the Baltic countries, as well as the development of practical knowledge in combined management and IT solutions application.

China's nonlife insurance market: New insights from the China Insurance Yearbook

AbstractChina's nonlife insurance market is among the largest in the world and is ripe for policy‐relevant research. The China Insurance Yearbook is well‐positioned to support this study. The current essay provides an overview of the China Insurance Yearbook and includes graphical summaries of yearbook data. We discuss implications for the study of nonlife insurance in China and highlight new insights that might be gained from an analysis of yearbook data.

THE EFFECTS OF CRM OVER SALESPERSONS’ SELLING INTENTION AND SALES PERFORMANCE: A RESEARCH IN TURKISH NON-LIFE INSURANCE MARKET

With the development of digital technologies and diversification of communication tools, customers demand similar experiences from all businesses independent of the industries. In the finance sector, insurance industry -with its intermediaries in both production and service stages- is lagging behind others in terms of improving customer experience and approach to the them. Intermediaries such as bancassurance, agents, and brokers have dominated nearly 80% of the sector. For this reason, insurance companies have started to invest in factors such as satisfaction of intermediaries, establishment of reward and target systems for intermediaries, and hence improving their performance. Although there are many research in the literature in order to measure and develop customer-oriented approaches, the wishes and needs of customers, and to establish healthier, long-term relationships between customers and businesses, companies in sectors that have intensive relations with intermediaries need to concentrate not only on their customers but also on intermediaries. Therefore, in this study, the effects of Customer Relations Management (CRM) applications on sales intention and sales performances of sales representatives working in the non-life insurance market have been tried to be measured. For this measurement, CRM applications were evaluated with four sub-dimensions: focus on key customers, CRM organizational structure, information management and technology-based CRM implementation. Data were collected from intermediaries in Turkish non-life insurance market and a total of 299 surveys were obtained. The results of the study suggests that effectively managed CRM practices have positive effects on both sales performances and sales intentions of sales representatives.