Threshold effect for the life insurance industry: evidence from OECD countries

Dragotă, Ingrid-Mihaela; Cepoi, Cosmin-Octavian; Ştefan, Lavinia

doi:10.1057/s41288-022-00272-8

Cited by 6 publications

(5 citation statements)

References 41 publications

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“…When using the entire sample (OECD + ASEAN), the logarithm of GDP consistently shows a positive and significant impact on all dependent variables, except for the premiums in the life insurance segment when using the total and ASEAN sample. These results are consistent with the static results obtained and previous studies (among others: Dragos (2014) and Dragotă et al (2023)). Additionally, the estimation results also indicate that the lag of two previous periods has a significant impact on gross premiums, suggesting that insurance companies need to anticipate the lasting and persistent effects of the change in income.…”

Section: Dynamic Impactsupporting

confidence: 94%

“…Regarding the first indicator, real GDP, the estimation results indicate a positive and significant relationship with both total and non-life gross premiums. These findings are consistent with previous studies that suggest an increase in income can enhance consumer affordability, leading to higher consumption of insurance products and premiums (Fortune, 1973;Dragotă et al, 2023). However, the results show a positive but insignificant relationship for the life insurance sector.…”

Section: Empirical Findings Static Impactsupporting

confidence: 92%

“…Both in the life and non-life insurance business, the GDP/income indicator shows a strong indication of a positive relationship with insurance premiums. Studies ranging from almost 50 years ago by Fortune (1973) to recent studies by Dragotă et al (2023) reinforce the empirical findings that link income and premiums. However, there is other evidence showing a reverse relationship for certain parts of the world.…”

Section: Literature Review/analytical Frameworksupporting

confidence: 52%

See 2 more Smart Citations

Interrelationship Between Macroeconomic Variables With Insurance Premiums and Claims – Lessons For Indonesia & ASEAN

Rohman,

Ronaldo,

Siregar

2024

J. ASEAN Studies

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The insurance sector plays a crucial economic role by helping individuals and businesses manage risks and uncertainties. By transferring some of their risks to insurance companies, individuals and companies can reduce the likelihood of bankruptcy compared to bearing the risks themselves. This role has become increasingly important in recent decades, particularly due to climate change, financial crises, and the COVID-19 pandemic, leading to greater volatility in macroeconomic indicators. Understanding these potential risks is key to ensuring the future sustainability and growth of the insurance sector in both Indonesia and ASEAN. The research objective is to examine the relationship between macroeconomic variables and insurance and claims. Using annual panel data regression analysis, we examine the relationship between macroeconomic indicators and insurance gross premiums in a sample of 63 countries from 2010 to 2019. The macroeconomic indicators used in the model are real Gross Domestic Product (GDP), inflation, interest rates, and exchange rates. The results suggest that macroeconomic variables play a significant role in determining the performance of gross premiums and claims. Lessons learned include that real GDP, inflation, and real interest rates show a positive and significant relationship with gross premiums, while exchange rates show a negative relationship. However, the lasting impact of these macroeconomic variables on gross premiums varies from one to the other. In fact, only two variables, real GDP and inflation, have a lasting impact. The results suggest that market players should provide strong and comprehensive risk management systems to address macroeconomic turbulence. Surveillance and monitoring macroeconomic indicators are essential, especially in a macro-dependent sector.

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Section: Dynamic Impactsupporting

confidence: 94%

Section: Empirical Findings Static Impactsupporting

confidence: 92%

Section: Literature Review/analytical Frameworksupporting

confidence: 52%

See 1 more Smart Citation

Interrelationship Between Macroeconomic Variables With Insurance Premiums and Claims – Lessons For Indonesia & ASEAN

Rohman,

Ronaldo,

Siregar

2024

J. ASEAN Studies

View full text Add to dashboard Cite

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“…Beck and Webb [2002] and Feyen et al [2011] point out several reasons for the significant and positive correlation between income and life insurance demand: greater availability of life insurance products, a stronger need to protect the potential income of the insured and the expected consumption of dependents, as well as reduced unit cost of larger life policies. Dragota et al [2022] revealed postitive and statistically significant impact of income (GDP per capita) on the demand for life insurance products. Mare et al [2019] considered the impact of employment on the purchase of life insurance and they obtained results showing that there was a significant and positive relationship between employment and life insurance demand.…”

Section: Literature Reviewmentioning

confidence: 99%

The Significance of Life Insurance Sale Management for the Development of the Financial Market

Nikolić,

Milojković,

Jemović

2023

ASHU- ES

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Life insurance companies as institutional investors are key participants in the global financial market. By collecting the savings of the insured, accumulating large amounts of funds and their long-term investment into various financial instruments, these companies affect the development and stability of the financial market. Considering their significance, the aim of this paper is to determine the determinants of life insurance demand by analysing the environment in which these companies operate on the European financial markets, in order to detect the possibilities for increasing the sale of life insurance policies, and thus the amount of collected amount that will be invested in the financial market for a long term. Based on the research results, determinants that may encourage the life insurance demand in European countries are determined and the recommendations on how to manage the sale of life insurance policies, with the aim of increasing the amount of collected funds.

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“…One of the postulations is that the age demographic of a population affects the insurance industry. On the other hand, a supply-side analysis considers the insurer's perspective and identifies factors such as affordability of premiums, Regulations on prices, claims processing procedures, supply paths, and products regulations as having a significant impact on insurance adoption (Dragotă et al, 2022;Mutembei, 2022;Mwongela, 2022;Sibiko & Qaim, 2020). Under supply side factors such as earnings and profitability, reinsurance and actuarial issues, capital adequacy, liquidity, asset quality, and management soundness impact financial soundness of insurers and indirectly supply of the products (Salameh, 2022).…”

Section: Drivers Of Insurancementioning

confidence: 99%

Drivers of potential policyholders’ uptake of insurance in Kenya using Random Forest

Yego

Nkurunziza

Kasozi

2023

Insurance Markets and Companies

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The low adoption of insurance by potential policyholders in developing countries like Kenya is a cause for concern for insurers, regulators, and other marketing stakeholders. To effectively design targeted marketing strategies to boost insurance adoption, it is crucial to determine the factors that affect insurance uptake among potential policyholders. In this study, the 2021 FinAccess Survey, which interviewed sampled individuals above 16 years in Kenya and machine learning techniques, including Random Forest, XGBoost, and Logistic Regression, were utilized to uncover the factors driving insurance uptake and the reasons for the low adoption of insurance among potential policyholders. Random Forest was the most robust model of the three classifiers based on Kappa score, recall score, F1 score, precision, and area under the operating characteristic curve (approaching 1). The paper explores eight reasons why people currently do not have insurance policies. The results indicated that affordability was the primary driver of uptake with 68.67% of having expressed a desire to possess insurance but are unable to afford it. The highest level of education being the next most significant factor. Cultural and religious beliefs and mistrust of insurance providers were found to have a minimal impact on uptake. These findings imply that offering affordable insurance products and conducting awareness campaigns are critical to increase insurance adoption.

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Threshold effect for the life insurance industry: evidence from OECD countries

Cited by 6 publications

References 41 publications

Interrelationship Between Macroeconomic Variables With Insurance Premiums and Claims – Lessons For Indonesia & ASEAN

Interrelationship Between Macroeconomic Variables With Insurance Premiums and Claims – Lessons For Indonesia & ASEAN

The Significance of Life Insurance Sale Management for the Development of the Financial Market

Drivers of potential policyholders’ uptake of insurance in Kenya using Random Forest

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