Enterprise risk management and economies of scale and scope: evidence from the German insurance industry

Altuntas, Muhammed; Berry-Stölzle, Thomas R.; Cummins, J. David

doi:10.1007/s10479-019-03393-x

Cited by 30 publications

(16 citation statements)

References 43 publications

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“…Altuntas et al (2011) offer information about risk management practices in the German insurance industry. Also, in a subsequent study, Altuntas et al (2019) demonstrate that ERM supports economies of scale and scope regarding revenue complementarities, based on a survey for German insurance companies. Yow and Sherris (2008) analyze the adoption of the ERM components by Australian insurers and found that frictional costs and financial distress costs motivate ERM engagement.…”

Section: Erm Implementationmentioning

confidence: 80%

“…Leoni 2017;Lechner and Gatzert 2018;Berry-Stolzle and Xu 2018;Altuntas et al 2019;Sax and Andersen 2019) when compared to developing ones(Zhao and Singhaputtangkul 2016;Zou and Hassan 2017;Yang et al 2018;Valaskova et al 2018;Suttipun et al 2018;Anton 2018;Annamalah et al 2018;Heong and Teng 2018;Silva et al 2019;Hanggraeni et al 2019;Nasr et al 2019;Khalil-Oliwa 2019). From the above-mentioned studies for developing countries, there is a concentration of studies in one category: the relationship of ERM with firm performance.…”

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confidence: 99%

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Enterprise Risk Management: A Literature Review and Agenda for Future Research

Anton

Nucu

2020

JRFM

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The Enterprise Risk Management (ERM) process has heterogeneously developed across the world, although it represents a leading paradigm, supporting organizations to identify, evaluate, and manage risks at the enterprise level. Academics have studied the process, but there is no complete picture of the determinants and implications of such an integrated risk management process. Therefore, we present a systematic empirical literature review on ERM, based on a research protocol. The review highlights that the ERM literature can be divided into four general lines of research: the ERM adoption, the determinants of the ERM implementation, the effects of ERM adoption, and other aspects. In contrast to the richness of studies devoted to ERM engagement in small and medium-sized enterprises (SMEs), studies exploring ERM adoption in banks or insurance are relatively few. The literature review has revealed that the most frequently investigated effect of ERM is on firm performance. Little effort has been dedicated to the analysis of the effectiveness of ERM by its components and to institutional, individual, and organizational factors that affect ERM adoption. The study can serve as a starting point for scholars to explore research gaps related to ERM, while the practitioners can rely on the presented findings to identify the effects of the ERM implementation.

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Section: Erm Implementationmentioning

confidence: 80%

mentioning

confidence: 99%

Enterprise Risk Management: A Literature Review and Agenda for Future Research

Anton

Nucu

2020

JRFM

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“…Alternatively, as a global measure of insurer profitability, we use return on equity (ROE) calculated as profit before taxes to equity capital for a robustness test (see e.g.,Shim, 2011).7 Using the natural log of total assets to measure firm size is a common practice, not only in studies on financial services firms, including insurers (see e.g.,Greene and Segal, 2004; Shiu, 2011;Altuntas et al, 2019) and banks (e.g.,Goetz et al, 2013), but also in analyses on nonfinancial services firms (e.g.,González, 2020). Taking the natural log of the total assets variable is advisable to control for outliers and when most values of the variable are skewed toward one of the distribution side (in this particular case to the right).…”

mentioning

confidence: 99%

Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

González‐Fernández

Rubio‐Misas

Ruiz

2020

Int Trans Operational Res

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This paper applies a multiobjective goal programming (GP) model to define the profile of the most profitable insurers by focusing on 14 firm‐decision variables and considering different scenarios resulting from the exogenous change in interest rate and GDP per capita growth variables. We consider a detailed database of Spanish non‐life insurers over the period 2003–2012 taking into account two dimensions of insurers’ results: underwriting results and investment results. A prior econometric analysis is used to find out relevant relations among the variables. Next, a GP model is formulated on the basis of the relationships obtained. The model is tested in a robust environment, allowing changes in the coefficients of the objective functions, and for several scenarios regarding crisis/noncrisis situations and changes in interest rates. We find that having the stock organizational form, being an unaffiliated single company and maintaining low levels of investment risk, leverage, and regulatory solvency are recommended for result optimization. Growth and reinsurance utilization are not advisable for optimizing the results, whereas size should be positively emphasized even more in instability periods and when interest rates increase. The results also show that the optimal level of the diversification/specialization strategy depends on economic conditions. More specialization is advisable as negative changes in interest rates increase. However, we find that the optimal values of the diversification variable are higher for the crisis scenarios compared to the corresponding noncrisis scenarios, suggesting that diversification creates value in crisis. Further sensitivity analyses show the soundness of the conclusions obtained.

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“…The database covers about 96% of the German market (measured by gross premiums). See Altuntas et al (2019) for additional information on the KIVI database. 6 State owned insurers (Öffentliche Versicherer) are non-profit organizations under public law to serve a certain region or administrative district in Germany.…”

Section: Methodsmentioning

confidence: 99%

Cost stickiness and the firm’s organizational form: evidence from the property-liability insurance sector

Gores¹,

Rauch

2021

ZVersWiss

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We examine the existence of cost stickiness in the German property-liability insurance sector by analyzing if the percentage increase in administrative costs for a rise in premiums is larger than the percentage decrease in administrative costs for an equivalent drop in premiums. In addition, we analyze if sticky cost behavior depends on insurance firms’ organizational form. Using company-level data from German property-liability insurance firms for the years 2001–2017 and regression analyses, we find that administrative costs are sticky in the insurance sector, as administrative costs increase on average 0.82% per 1% increase in premiums but decrease only 0.6% per 1% decrease in premium income. Moreover, we find that stock insurers exhibit lower levels of cost stickiness, indicating better monitoring mechanisms.

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Enterprise risk management and economies of scale and scope: evidence from the German insurance industry

Cited by 30 publications

References 43 publications

Enterprise Risk Management: A Literature Review and Agenda for Future Research

Enterprise Risk Management: A Literature Review and Agenda for Future Research

Goal programming to evaluate the profile of the most profitable insurers: an application to the Spanish insurance industry

Cost stickiness and the firm’s organizational form: evidence from the property-liability insurance sector

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