Factors Affecting Profitability of General Insurance Companies in Indonesia

Abstract

This research work shows the impact on profitability by Return on Assets (ROA) on capital adequacy measured by Risk Based Capital (RBC), Return on Investment (ROI) and Solvency by Debt Equity Rate (DER) measured). Then prove the RBC and ROI effect on DER, then demonstrate the RBC 's influence on ROA through DER, demonstrate the ROA impact on the general insurers reported upon on Indonesian Stok Exchange 2015-2018. The design of the research was causal research. Technical sampling using a deliberate method of sampling. During the four-year observation period, eight companies were obtained using this method that met the criteria of 14 companies. 32 samples in total. Study of linear regression model and path analysis is utilized in data analysis process. ROI has a positive and significant ROA effect, and DER has an adverse effect and important to ROA; The report's result shown that RBC has no significant ROA impact. Then RBC has an impact on DER, but ROI has a positive and important effect on DER. RBC via DER then has no significant impact on ROA, whereas ROI via DER has a positive and substantial impact on ROA. RBC has a significant negative effect on DER, and ROI has a significant and positive effect on DER. Then RBC by DER does not have a significant ROA effect, while ROI by DER has a positive and significant ROA impact. RBC then has a significant negative impact on DER, while ROI has a positive and important impact on DER. Contribution/Originality: This research is one of the first empirical studies to examine the profitability factors of general insurance policyholders in Indonesia. The study findings reveal these factors and their importance in terms of profitability for insurance companies. 1. INTRODUCTION Based on finance minister No.53 / PMK.010/2012, Financial Health Law of the indonesian, Reinsurance Societies and Enterprises, each insurance company is required to have a Risk-Based Capital (RBC) of at least 120%. RBC is directed to see the level of security that can be provided by companies to policyholders to provide high trust to the public towards insurance companies; a high RBC shows a high level of capital adequacy for insurance companies in meeting their obligations. High investment results will increase the number of profits obtained by the company so that if the company makes a profit, the Profitability will increase so that the company's capital boost in order to maximize the amount of business properties.

Pengaruh Program Inkubasi Bisnis terhadap Kinerja Organisasi Usaha Mikro Bidang Kuliner (Studi pada Anggota Rumah BUMN Bandung)

“…Dimensi finansial meliputi pengembalian aset (ROA), laba atas investasi (ROI), laba atas ekuitas (ROE), pangsa pasar, pertumbuhan penjualan dan profitabilitas. Sedangkan dimensi non-finansial meliputi kepuasan klien, kepuasan karyawan, kemampuan inovasi, efisiensi proses bisnis internal dan peningkatan kinerja dari aset tidak berwujud (Li, 2018;Maulana & Mulyana, 2020;Tseng & Lee, 2014).…”

Impacts of Insurers’ Financial Insolvency on Non-Life Insurance Companies’ Profitability: Evidence from Bangladesh

“…Insurer financial insolvency has been a theme of study and area of interest for the last decade. Maulana and Mulyana (2020) stated that insurance profit is one such concept that has been implemented to signify the overall incremental profit of the insurer derived from the writing of the insurance sector. (Zainudin et al 2018;Dhiab 2021) found various firm-specific factors, including solvency ratio, age of companies, financial leverage, technical provision, premium growth, and claim ratio, that influence insurance companies' financial performance.…”

Dynamics of the Insurance Paradigm Analysis in Pakistan: An Evidence of Leading Islamic, Public and Private Insurers

“…After the brief introduction, it has been logically observed that a profuse amount of literature has been found globally that describes the general insurance paradigm in different ways for divergent states in different spans of time. Bansal and Singh (2021) quantified the insurance businesses planned on the stock exchange in six 'Gulf Cooperation Council (GCC) states (Maulana & Mulyana, 2020) investigated and established a link between economic insolvency and general insurers' productivity in the insurance sector of Bangladesh.…”