The magic triangle: growth, profitability and safety in the insurance industry

Eling, Martin; Jia, Ruo; Schäper, Philipp

doi:10.1057/s41288-021-00230-w

Cited by 9 publications

(26 citation statements)

References 39 publications

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“…This finding is consistent with previous results by Fields et al (2012) for an international analysis of non-life insurers. It is also in line with the results by González-Fernández et al (2020) for Spanish non-life insurers and with the findings by Eling et al (2022), who showed that risk positively impacted the ROE of European insurers. We also observe that size increases profitability since the coefficient of the size variable is positive and statistically significant.…”

Section: Econometric Analysissupporting

confidence: 91%

“…This result is in line with Hardwick and Adams (2002), who found that during the boom years of 1987-1999, smaller U.K. life insurers were growing fasters than the larger ones. It is also consistent with Eling et al (2022) in their analysis of European insurers. The results also indicate that capitalization and reinsurance utilization decrease growth.…”

Section: Econometric Analysissupporting

confidence: 88%

“…Eling and Jia (2019) found that growth affected profitability negatively. Eling et al (2022) found, for European insurers, that moderate firm growth increases profitability, but extremely high growth reduces it.…”

Section: The Effect Of Risk and Growth On Profitabilitymentioning

confidence: 99%

“…However, these authors found no effect of profitability on risk in their international analysis of non-life insurers. Nevertheless, Eling et al (2022) showed that less profitable insurers were more willing to take risks.…”

Section: The Effect Of Profitability and Growth On Riskmentioning

confidence: 99%

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Multi‐objective reference point techniques to optimize profitability, growth, and risk in the non‐life insurance industry: international analysis

González‐Fernández

Rubio‐Misas

Ruiz

2022

Int Trans Operational Res

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This paper combines reference point techniques and econometric analyses to provide the profile of non-life insurers that simultaneously optimize the strategic growth, profitability, and risk goals. The econometric analyses provide the relevant relations among the variables. Non-life insurers from 33 Organisation for Economic Co-operation and Development countries over a six-year period are analyzed. A cluster analysis allows forming groups of countries according to the non-life insurance penetration ratio. Several scenarios, which are characterized by the maturity of the market and the crisis/non-crisis situation, are studied. The results indicate that the highest level of profitability (growth) is linked to scenarios with a medium (low) level of maturity and booming times. They also show that the lowest level of risk that is representative of good performance is associated with scenarios where markets have a high level of maturity and crisis times. We find that a higher recommendable size is associated with more mature markets. The results also indicate that reinsurance utilization is linked to a crisis time. We additionally find that the recommendable level of capitalization differs significantly among scenarios.

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Section: Econometric Analysissupporting

confidence: 91%

Section: Econometric Analysissupporting

confidence: 88%

Section: The Effect Of Risk and Growth On Profitabilitymentioning

confidence: 99%

Section: The Effect Of Profitability and Growth On Riskmentioning

confidence: 99%

See 2 more Smart Citations

Multi‐objective reference point techniques to optimize profitability, growth, and risk in the non‐life insurance industry: international analysis

González‐Fernández

Rubio‐Misas

Ruiz

2022

Int Trans Operational Res

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“…The majority of businesses aim to accept the vast majority of risks at standard rates, but they nonetheless impose modified premiums for risks that don't fit normal norms that take into account loss experience and other considerations. Although costcutting through selective underwriting may boost profitability, market share may be lost to rivals (Eling, Jia & Schaper, 2022). Higher claim expenses brought on by lowering pricing and lowering underwriting requirements might result in declining/poor underwriting outcomes (Mwang, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The Role of Loss Adjustment Practices on the Performance of Insurance Sector

Kajwang¹

2022

IJBS

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Purpose: The purpose of this study was to determine the role of loss adjustment practices on the performance of insurance sector Methodology: A desktop literature review was used for this purpose. , a systematic search was carried out using Google Scholar, Semantic Scholar, and Research Gate. The study included relevant sources that were published between 2015 and 2022. Findings: It was found that sound loss adjustment practices are a prerequisite for optimal financial and non-financial performance of insurance firms. It was concluded that having a clear policy approved by senior management, with regards to ex-gratia claim payments reduced the financial risks. It was also concluded that insurance firms can enhance their financial performance by regularly reviewing their claims handling guidelines to factor in new developments and trends. The study further concluded that non-financial and financial performance of insurance firms in influenced by quality reviews of claims to assess whether they are handled professionally and resolved appropriately. One of the performance measures could be the number and nature of complaints against the insurer with respect to their claims settlement decisions. The performance is also influenced by monitoring the level of claims which should not have been paid or are overpaid and the severity of delays in claims registration and case reserves revision. Unique Contribution to Theory, Practice and Policy: Based on the study findings, it was recommended that insurance firms should endeavor to set case reserves accurately for each claim in a timely manner, especially in respect of general insurance business. The components of case reserves should also be captured in sufficient details to provide useful statistics for in-depth analysis. For example, a single claim file could have separate components for own property damage, third party liabilities and fees payable to external parties. Another recommendation is that the insurer should have a clear policy, approved by senior management, with regards to ex-gratia claim payments. The authority to approve such payments should also be clearly specified and the rationale for the approval should be properly documented.

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The Determinants of Profitability of Insurance Companies: Evidence from Developing Countries

Abdeljawad,

Farhood

2024

Studies in Systems, Decision and Control

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The magic triangle: growth, profitability and safety in the insurance industry

Cited by 9 publications

References 39 publications

Multi‐objective reference point techniques to optimize profitability, growth, and risk in the non‐life insurance industry: international analysis

Multi‐objective reference point techniques to optimize profitability, growth, and risk in the non‐life insurance industry: international analysis

The Role of Loss Adjustment Practices on the Performance of Insurance Sector

The Determinants of Profitability of Insurance Companies: Evidence from Developing Countries

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