Non-life Insurance Research Articles

FINANCIAL INCLUSION IN INDIA – AN ASSESSMENT

Financial inclusion can be defined as a process of providing financial services to the poor and deprived sections of the society, whose income is low. The main objective of financial inclusion is to remove all the barriers that prevent people from getting financial assistance and provide financial services without any discrimination like banking i.e., savings and payments through bank branches, ATM, cheques, and e-transfer; Insurance i.e., life as well as non-life (general) insurance; credit i.e., loans at affordable rates; investment opportunities like mutual funds, pension plans, child investment plans etc. This paper is an attempt to know about the present status of financial inclusion and various measures taken by government for greater financial inclusion in India. The paper highlights the impact of financial inclusion if they are present or absent in an economy and importance of financial inclusion in economic and social development.

Robin hood insurance broking: driving growth with differentiation

Learning outcomes Students will have the opportunity to learn about differentiation strategy, business plans, strengths, weaknesses, opportunities and threats analysis. The primary objective is to allow students to evaluate Abhishek Singh’s decisions. After working through the case and assignment questions, students will be able to: understand the competitive landscapes in the Indian insurance broking market. Differentiate between selling and marketing. Understand the importance and application of differentiation strategy in the Indian insurance broking market. Emphasize the importance of value proposition in developing a competitive advantage for insurance broking organization. Critically analyze the internal strength and weaknesses of an insurance broking company. Case overview/synopsis RHIBPL, one of India’s largest insurance broking companies, operating for more than 12 years and has had a strong presence in eight major cities of India. RHIBPL had been known for life insurance, non-life insurance like cars, two-wheelers, Mediclaim and health. RHIBPL’s unique selling proposition was the best fit for each product and service after understanding the customer’s need. On October 16, 2020, Abhishek Singh, CDO at RHIBPL, was preparing for an upcoming management meeting on the company’s vision “to be the largest insurance provider in the country and to reach US$ 140 million by 2025,” which was communicated by the Ajay Bansal, founder and chief executive officer of RHIBPL. Singh had to prepare an action plan to achieve the RHIBPL’s vision. He had to develop and implement a differentiation strategy to achieve the RHIBPL’s vision from the available resources. How can he create a competitive advantage for RHIBPL in the highly competitive insurance broking market? Complexity academic level The case delineates the challenges facing an insurance broker company to achieve its new corporate vision. This case can be discussed in undergraduate and postgraduate courses (at the introductory level) in the business management discipline to understand the importance and application of differentiation strategy and competitive advantage. This case can also be significant for insurance-related courses for postgraduates and executives working in the insurance industry. The case can be useful for the courses on services marketing, strategic management, strategic marketing management and marketing management. Supplementary materials Teaching notes are available for educators only. Subject code CSS 8: Marketing.

Catastrophic and systemic risk in the non-life insurance sector: A micro-structural contagion approach

Borrowing from the interbank contagion literature, we propose a model to study the stability of non-life insurance sector in presence of catastrophic events. These events are increasingly common, and cause a large amount of damage in short periods. To account for this risk we introduce random and correlated reinsurance claims. We show in a simulation study that the sector is particularly sensitive to random correlated insurance claims, and the threat of systemic risk emerges. The risk persists even with highly diversified network structures. The work is relevant for regulators to define macro-prudential policies, and for practitioners to measure credit risk.

Two‐part D‐vine copula models for longitudinal insurance claim data

AbstractIn short‐term nonlife (e.g., car and homeowner) insurance, policies are renewed yearly. Insurance companies typically keep track of each policyholder's claims per year, resulting in longitudinal data. Efficient modeling of time dependence in longitudinal claim data will improve the prediction of future claims needed for routine actuarial practice, such as ratemaking. Insurance claim data usually follow a two‐part mixed distribution: a probability mass at zero corresponding to no claim and an otherwise positive claim from a skewed and long‐tailed distribution. This two‐part data structure leads to difficulties in applying established models for longitudinal data. In this paper, we propose a two‐part D‐vine copula model to study longitudinal mixed claim data. We build two stationary D‐vine copulas. One is used to model the time dependence in binary outcomes resulting from whether or not a claim has occurred. The other studies the dependence in the claim size given occurrence. Under the proposed model, the prediction of the probability of making claims and the quantiles of severity given occurrence is straightforward. We use our approach to investigate a dataset from the Local Government Property Insurance Fund in the state of Wisconsin.

The Relationship between Non-Life Insurance and Economic Growth: 1985-2018 Evidence from Turkey

Sigortacılık, risklerle dolu evrende, insanların kendilerini bu risklerin doğuracağı kayıplara karşı güvence altına alma ihtiyacından doğmuş ve günümüzde önemli bir finansal sektör haline gelmiştir. Sigorta yalnızca prim ve tazminat ilişkisinden ibaret olmayan, ekonomik ve toplumsal çok yönlü işlevleri olan bir yapıdır. Sigorta etkin bir risk yönetimi ile ekonomik kayıpları azaltabilmekte ve havuzda biriken fonlarla yatırımları destekleyebilmektedir. Bu çalışmada da sigortacılığın ekonomik işlevlerinden yola çıkılarak hayat dışı sigortaların ekonomik büyüme ile ilişkisini analiz etmek amaçlanmıştır. Yöntem olarak öncelikle değişkenlerde birim kök varlığı Augmented Dickey-Fuller (ADF) ve Phillips-Perron (1988) birim kök testleri ile incelenmiştir. Ardından değişkenler arasında uzun dönemli ilişki olup olmadığını belirlemek amacıyla (Banerjee vd. 2017) tarafından geliştirilen Fourier ADL eşbütünleşme testi uygulanmıştır. Son olarak eşbütünleşik değişkenlerin uzun dönem parametre katsayıları belirlemek amacıyla dinamik en küçük kareler (DOLS) yöntemi kullanılmıştır. Sonuç olarak hayat dışı sigortacılığın ekonomik büyümeyi pozitif yönde etkilediği tespit edilmiştir.

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

Impact of financial inclusion on food security: evidence from developing countries

PurposeThe paper empirically investigates the impact of financial inclusion on food security. Subsequently, it examines the overall effect of various dimensions of financial inclusion on food security of developing countries using the panel data for the time period of 2004–2019.Design/methodology/approachTo overcome the problem of endogeneity, the study has used a fixed-effect model, two-stage least-square and system generalized method of moments estimation techniques. Secondary data was collected from various websites such as WDI, FAO, UNICEF and UNESCO.FindingsIt was found in the study that there is a significant effect of financial inclusion on food security. The evidence shows that if there is more financial inclusion in the country, it will help poor people to cope with difficult situations they face and provide them food security. Financial development, per capita income, agriculture growth and education positively affect food security, while militarization and urbanization have a negative impact on food security. The crux of the analysis is that any country's financial sector is an integral part of any country that supports food security.Originality/valueThe literature does not clearly show the impact of financial inclusion dimensions on developing countries' food security. Therefore, there is a need to use all the dimensions of financial inclusion to check the overall impact on food security. For this purpose, the financial inclusion index is developed. A new dimension of non-life insurance is introduced that has not been used previously by any researcher to check financial inclusion impact.

Reinsurance: A Risk Management Instrument for Insurance Companies’ Profitability (A Case of Non-Life Insurance in Nigeria)

The study is carried out to determine reinsurance in place of a risk management instrument and its effect on the non-life insurance firms’ profitability in Nigeria, adopting ex-post-facto design, with multiple correlation and regression model to analyze the data obtained from Nigeria Insurers Association Digest report 2007 to 2018, which is indicating 12 years of study sample size. The findings of the study show that Premium Cession Ratio (PCR) and Net Retention Ratio (NRR) have positive effect on the profitability (ROA) of insurance companies but not significant with their coefficient values of (0.059880 and 0.006273) and their associated probability values of (0.2811 and 0.8880) respectively. However, the findings reveal that Reinsurance Dependence Cede Premium (RDC) and Reinsurance Commission to Shareholder’s Equity (RCS) have affected the profitability (ROA) of insurance business entities negatively and insignificantly with their values of coefficient (-0.266824 and -0.894553) and their corresponding p-value is (0.5149 and 0.3497) respectively.

Health public crisis impact on non-life insurance: the case of COVID-19

The insurance industry plays a crucial role in developing a country's economy, thus becoming one of the main focuses when studying the possible impacts of the current public health crisis. Accordingly, the main objective of this study is to investigate the COVID-19 impact on non-life insurance profitability of the Portuguese insurance sector. This study also intends to assess the explaining factors of insurance companies' profitability on the period between 2004/2020. The methodology implemented was a multiple linear regression, using a panel data model with random effects. The sample consists of a total of 238 observations from 14 non-life insurers over 17 years. The results revealed that COVID-19 positively impacted the profitability of the insurance companies presented. However, this impact was only significant on the return on assets. Furthermore, the results showed an inverse and meaningful relationship between the profitability ratios and the variables leverage and loss ratio.

Does insurance work? Dynamic assessment of insurance, poverty, and climatic hazard outcomes in Thailand

While the linkage between poverty and climatic hazard outcomes is well documented in the development agenda along with the role of disaster risk financing, dynamic subnational-level statistical assessment of causal effects of formal insurance on climatic hazard outcomes has been scarce to date. This paper investigates the relationship between insurance, poverty, and outcomes of climatic hazards (i.e., flood and drought) using a panel dataset of 76 provinces in Thailand for the period 2009–2018 by applying the panel Granger non-causality test using the half-panel jackknife procedure for deriving bias-corrected estimators. Several bidirectional causalities were revealed between insurance and poverty, insurance and hazard outcomes, and poverty and hazard outcomes, whilst diverse patterns of short-run unidirectional causalities were identified between those variables in several instances. The results suggest that nonlife insurance plays a significant role in alleviating poverty through its rapid effects as well as longer influence. Moreover, insurance consumption had causal effects on hazard outcomes. On the other hand, exposure to flood and drought had significant effects on insurance consumption, particularly nonlife insurance. These findings highlight the relevance of insurance, in particular nonlife insurance, as an ex-ante mechanism for reducing vulnerability to poverty in the aftermath of natural hazards.

Customer Satisfaction in Non-Life Insurance Companies in Kenya: Does Information Technology Agility Matter?

Customer Satisfaction in Non-Life Insurance Companies in Kenya: Does Information Technology Agility Matter?

Health Public Crisis Impact on Non-Life Insurance: The case of Covid-19

Health Public Crisis Impact on Non-Life Insurance: The case of Covid-19

Impact of sector levy on non-life insurance in Slovakia

Impact of sector levy on non-life insurance in Slovakia

Insurance business diversification and systemic risk

Risk diversification regarding business lines with imperfectly correlated cash flows can reduce the financial distress risk of an institution due to coinsurance effects. Therefore, business diversification might also lower systemic risk from a “domino” perspective, in which the financial distress of an institution causes financial contagion risks to other institutions that result in systemic risk. The underwriting of risks by insurers is typically considered not systemically risky by itself, providing the basis for the diversification of insurance business lines to potentially reduce systemic risk. Since life and non-life insurance lines generally show substantially different underwriting characteristics, this paper studies if the diversification of both insurance business lines can create a financially stabilizing diversification effect, therefore reducing systemic risk. By means of a theoretical portfolio model and empirical analysis, the findings suggest that diversified insurers engaging in both insurance lines have, on average, a lower contribution to systemic risk than monoline life and non-life insurers. More specifically, insurers with a business allocation in the range of 54% life insurance are, on average, associated with the lowest contribution to systemic risk. These findings have practical implications for the design of macroprudential insurance regulation, which currently neglects the financially stabilizing potential of the diversification of both insurance business lines.

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.

INTRODUCTION TO NON LIFE MATHEMATICS WITH REFERENCE TO PRICING: CONCEPTS, ORIGIN OF THE MODELS AND A PROPOSAL FOR AN ONGOING MONITORING OF THE PERSONALIZED PREMIUM

Pricing is a fundamental topic for a nonlife insurance company. It includes several underwriting activities to set actuarial models. In the past, it was a fundamental part of risk theory and nonlife insurance mathematic and nowadays results in a vast actuarial research field. Since the second half of twentieth century, many papers have been published in actuarial journals. This work originates from the experience of introductory university lectures of the author. After an historical recognition, a proposal is made of a simplified approach to monitor consistency and quality of the personalized premiums over time.

A Study Of Indian Insurance Sector Challenges And Opportunities

Insurance sector in India is one of the growing sectors of the economy. India’s growing consumer class, rising insurance awareness, increasing domestic savings and investments are among the most critical factors that have positively driven the market penetration of the insurance product among its consumer segments. Both the life and non-life insurance in India, which were nationalized in the 1950s and 1960s respectively, which were liberalized in 1990s. Since the formation of IRDA and the opening of the insurance sector to private players in 2000, the Indian insurance sector has witnessed rapid growth. India is among the most promising emerging insurance markets in the world. Notwithstanding the rapid growth of the sector over the last decade, insurance in India remains at an early stage of development. The dynamic growth of insurance buying is partly affected by the changing income of insurance demand. Insurance is a shield which protecctor. The players needs to create awareness in the new rural market and take the pain to understand the needs and demands of the Indian customers. Customer’s satisfaction should be given priority. They should work along with the government in order to grow.

Antecedent of risk-based capital of public non-life insurance companies in Indonesia

The performance of the insurance service industry has an impact on the Indonesian economy, therefore insurance companies must be able to maintain their sustainability by maintaining a level of financial health, generally represented by risk-based capital (RBC). The purpose of this research is to test and analyse whether the macro indicators such as customer price index (CPI), gross domestic product (GDP), central bank interest rate (BIR); and micro indicators such as investment performance, loss ratio and total assets are antecedent of RBC. This quantitative research used nine samples of public non-life insurance companies in Indonesia and the secondary data were collected from annual financial reports from 2008-2019 and macroeconomic data were collected from Statistic Bureau Centre, then data panel regression analysis was conducted to test the research hypotheses. The results show that loss ratio, total assets and the movement of GDP are antecedent of the RBC. Total assets has relative big impact (positive) on RBC and loss ratio has relative small impact (positive) on RBC, on the other hand GDP has a relative medium impact (negative) on RBC. In other words, two micro indicators and one macro indicator have impacts on RBC.

Antecedent of risk-based capital of public non-life insurance companies in Indonesia

Antecedent of risk-based capital of public non-life insurance companies in Indonesia

Osiguranje poljoprivrede u Republici Srpskoj

There is a significantly large, objective need for the agricultural insurance coverage in the Republic Srpska, especially in the environment of increasing climate changes. The insurance companies whose offer includes the insurance of agriculture are increasingly present and competing on the market, but the government also provides a big support by granting subsidies for agricultural insurance premiums. The author of this paper analyses the number and structure of agricultural insurance policies, the share of total agricultural insurance premiums in the non-life insurance premium total and/or the number of registered agricultural farms that benefited from the agricultural insurance premium recourses and/or took out the insurance coverage for their production. She concludes that the economic protection provided under the agricultural insurance cover has been underutilized in the Republic Srpska.