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Article

Galena Pisoni

This paper aims to present the case of an Italian SME in the domain of insurance and how it approached its own digital transformation. Together with the founders of the…

Abstract

Purpose

This paper aims to present the case of an Italian SME in the domain of insurance and how it approached its own digital transformation. Together with the founders of the SME, the author investigated the digital trends the company should adopt and identified where to intervene in the value chain of the company with new technologies available in the market. The research was focused on the following three sub-domains: a strategy for adoption of innovative digital solutions to improve the everyday operations of the company, platform connecting the company with the customers and analysis of cyber insurance policies to include in the portfolio of the company.

Design/methodology/approach

For the part on strategy for adoption of innovative digital solutions, the author performed literature review; for the part in which the study ideates new solution to better connect the company with the customers, the author relied on design thinking, creative facilitation and prototyping; and for the part on cyber insurance policies to include the portfolio, the author relied on data available from other insurance companies the SME collaborates with.

Findings

This paper presented the analysis on how an insurance SME can embrace digital innovation (via internal innovation, buying from startups, partnering with startups or investing in startups), how an SME can do internal innovation and come up with a simple tool to bring closer the insurers and their customers and types of new cyber risk policies to include in the portfolio to respond to the growing demand for cyber risk insurance. This paper provides useful insights and lessons learned from companies of similar size in the domain of insurance and discusses future extensions of inquiry.

Originality/value

Big insurance companies and incumbent for their digitization efforts rely on the freshly created InsurTechs wave of companies. In this paper, the author analyzes what small- and medium-sized insurance enterprises can do in this respect and showcases the approach an Italian SME took in this direction.

Details

Journal of Business Strategy, vol. 42 no. 2
Type: Research Article
ISSN: 0275-6668

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Article

Reproduces an exclusive extract from Chapter 22 of the new edition of Copeland, Koller and Murrin’s definitive work Valuation: Measuring and Managing the Value of Companies

Abstract

Reproduces an exclusive extract from Chapter 22 of the new edition of Copeland, Koller and Murrin’s definitive work Valuation: Measuring and Managing the Value of Companies. Covers the practical techniques to use in the difficult issue of valuing insurance companies, using Trans America as a case study.

Details

Balance Sheet, vol. 8 no. 6
Type: Research Article
ISSN: 0965-7967

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Book part

Rashmi Malhotra, D. K. Malhotra and Akash Dania

The economic crisis of 2007–2009 had a major negative impact on financial institutions in general. Health and life insurance industry continues to face growth challenges…

Abstract

The economic crisis of 2007–2009 had a major negative impact on financial institutions in general. Health and life insurance industry continues to face growth challenges even six years after the economic crisis. Due to the challenges faced by health and life insurance industry, several companies in this industry have merged and some decided to get out of this business altogether. This study benchmarks 10 life and health insurance companies on the basis of return on equity, investment yield, and loss ratio for the year 2009 and 2014.

Details

Applications of Management Science
Type: Book
ISBN: 978-1-78714-282-4

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Article

Jyh-Horng Lin, Fu-Wei Huang and Shi Chen

The purpose of this paper is to develop a theoretical framework to answer the following question: What are the consequences of sunflower behavior as well as spread…

Abstract

Purpose

The purpose of this paper is to develop a theoretical framework to answer the following question: What are the consequences of sunflower behavior as well as spread behavior for how asset-liability management is administrated in a life insurance company?

Design/methodology/approach

This paper takes into account the following: the chief executive officer (CEO) of a life insurance company confirms the board of directors’ belief – the preference of the like of higher return relative to the dislike of higher risk; the authors call such behavior sunflower management; the life insurance policyholder is entitled to a guaranteed interest rate and a participation percentage of the company’s investment surplus; and the authors examine the optimal insurer interest margin, i.e., the spread between the loan rate and the guaranteed rate.

Findings

Sunflower management translates into lower utility for the CEO and makes the CEO more prudent to risk-taking at an increased insurer interest margin for the provision of life insurance contracts. The effect of the guaranteed rate on the margin is ambiguous and depends on the level of guarantee itself. An increase in the participation level decreases the CEO’s loan risk-taking at an increased margin. It is shown that a trend toward higher return like of the board’s belief produces a corresponding trend toward the CEO’s decreasing risk-taking when the return like is revealed strongly. The results indicate that sunflower management as such is an important determinant in ensuring a safe insurance system.

Originality/value

This is the first paper to construct a contingent claim model to evaluate the expected value of the CEO’s utility function defined in terms of the equity returns and the equity risks of a life insurance company. The model explicitly considers CEO sunflower behavior, CEO spread behavior and the limited liability of shareholders.

Details

Review of Behavioral Finance, vol. 11 no. 3
Type: Research Article
ISSN: 1940-5979

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Article

Islam Amer

The purpose of this paper is to study the sensitivity of foreign exchange exposure through the cash flow estimation method using a sample of 59 UK insurance companies

Abstract

Purpose

The purpose of this paper is to study the sensitivity of foreign exchange exposure through the cash flow estimation method using a sample of 59 UK insurance companies. This approach allows a decomposition of exposures into short- and long-term components. By revealing the nature of their cash flow exposures, companies can evaluate the effectiveness of their hedging programmes and focus their hedging efforts according to the nature of their exposures.

Design/methodology/approach

Martin and Mauer’s (2003, 2005) three-stage model is used to estimate foreign exchange rate transaction exposures for the sample of 65 UK insurance companies over the period 2004-2013. However, this paper has one important innovation to this method. Instead of the model used in previous papers, the paper uses a model from the actuarial field that was proposed by Blum et al. (2001) for modelling foreign exchange rates with their relevant constituents (inflation and interest rate).

Findings

The evidence shows that the currency transaction exposure for non-life insurers is greater than that of life insurers. Moreover, the author finds that large insurers exhibit lower frequencies of foreign exchange transaction exposure than small insurers.

Originality/value

The value of this paper comes from the fact that revealing the nature of cash flow exposures, companies can evaluate the effectiveness of their hedging programmes and focus their hedging efforts according to the nature of their exposures.

Details

Journal of Economic and Administrative Sciences, vol. 32 no. 2
Type: Research Article
ISSN: 1026-4116

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Article

Richard Dobbins and Norman H. Cuthbert

The Growth of Institutional Shareholdings 1966–1980. Institutional investors, particularly insurance companies and pension funds, are consistent purchasers of company and…

Abstract

The Growth of Institutional Shareholdings 1966–1980. Institutional investors, particularly insurance companies and pension funds, are consistent purchasers of company and overseas securities. Of particular interest is the ownership of U.K. quoted equities, rather than ownership of debentures, preference shares and overseas securities. Ownership of the ordinary share capital is of particular interest because the votes attached to equities give the holders legal powers to influence management through general meetings. The impact of the growth of institutional shareholdings on corporate management and the London Stock Exchange will be discussed in later articles. This article demonstrates the growth of institutional ownership of British industry, comments on the concentration of institutional holdings in large companies, illustrates the avoidance of new issues by financial institutions, and comments on the future pattern of U.K. share ownership.

Details

Managerial Finance, vol. 11 no. 3/4
Type: Research Article
ISSN: 0307-4358

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Article

Irinja Mäenpää

This paper aims to examine the extent of and key determinants for bank and insurance provider selection and usage by business customers from the small to medium‐sized…

Abstract

Purpose

This paper aims to examine the extent of and key determinants for bank and insurance provider selection and usage by business customers from the small to medium‐sized enterprise (SME) segment, thereby aiming to increase understanding of the drivers of customers' cross‐buying behaviour across these financial service sectors.

Design/methodology/approach

Semi‐structured interviews were carried out with key decision makers from 22 SMEs within one country. Content analysis was employed to analyse the data.

Findings

Empirical findings suggest use of multiple banks as the norm among SMEs, whereas insurances are dominantly purchased from a single provider. As SME customers appear to prefer using separate, independent providers for their banking and insurance services, absence of customer loyalty programs, unfavourable pricing of the total offering and image conflicts were identified as main factors limiting the willingness to cross‐buy across these financial services sectors.

Research limitations/implications

This qualitative research is focused on the financial industry within one country and bound to smaller business customers, limiting the generalisability of the findings.

Practical implications

The results imply that in order to succeed in cross‐selling bank and insurance services in the SME segment, financial service providers should improve their cross‐selling concepts by creating customer loyalty programs that would reward customer companies according to the use of multiple products in their total portfolio.

Originality/value

This study is the first to describe the customer perceived drivers of cross‐buying bank and insurance services from the same service provider in the business‐to‐business context.

Details

International Journal of Bank Marketing, vol. 30 no. 3
Type: Research Article
ISSN: 0265-2323

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Article

Ahmed A. Elamer, Aws AlHares, Collins G. Ntim and Ismail Benyazid

This study aims to examine the impact of internal corporate governance mechanisms on insurance companies’ risk-taking in the UK context.

Abstract

Purpose

This study aims to examine the impact of internal corporate governance mechanisms on insurance companies’ risk-taking in the UK context.

Design/methodology/approach

The study uses a panel data of all listed insurance companies on FTSE 350 over the 2005-2014 period. Multivariate regression techniques are used to estimate the effect of internal corporate governance mechanisms on insurance companies’ risk-taking.

Findings

The results show that the board size and board meetings are significantly and negatively related to risk-taking. In contrast, the results show that board independence and audit committee size are statistically insignificant but negatively related to risk-taking. The findings are robust to alternative measures and endogeneities.

Research limitations/implications

The findings have important implications for investors, managers, regulators of financial institutions and effectiveness of corporate governance reforms that have been pursued. Investors may further rely on internal corporate governance attributes to form expectations about risk-taking behaviour. Insurance companies need strong governance, as well as effective accounting and financial reporting standards, to enable proper insights into the company’s financial position.

Originality/value

This study contributes to the corporate governance literature and creates significant evidence regarding the role of corporate governance in constraining risk-taking behaviour in an industry with significantly complex context.

Details

International Journal of Ethics and Systems, vol. 34 no. 4
Type: Research Article
ISSN: 0828-8666

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Article

S.A. Aduloju, A.L. Awoponle and S.A. Oke

Recapitalization, mergers, and acquisitions are the most crucial issues confronting the Nigerian Insurance Industry (NII) in recent times. Yet information relating to…

Abstract

Purpose

Recapitalization, mergers, and acquisitions are the most crucial issues confronting the Nigerian Insurance Industry (NII) in recent times. Yet information relating to these issues is rarely reported in print. The purpose of this paper is to present the results of a survey aimed at understanding the challenges faced within the NII and the reactions of the insurance underwriters towards the recapitalization exercise in Nigeria.

Design/methodology/approach

Stratified sampling was applied in segregating listed insurance companies on the Nigeria Stock Exchange into top‐, middle‐, and lower‐management cadres. Random sampling was then used in selecting samples of the insurance company's staff. A questionnaire containing both open‐ended and closed‐form questions was used as the instrument to collect the primary data. Questionnaire administration was combined with personal interviews and record viewing in gathering relevant facts for use. Fifty‐four questionnaires were properly filled and returned from members of staff of the selected insurance companies. Chi‐square statistical procedures revealed the true position of the issues raised in the hypotheses.

Findings

Recapitalization has been enhancing the development of the insurance industry and mergers and acquisitions have remained viable options for companies to remain in business.

Research limitations/implications

Limited financial and non‐financial resources, as well as a reluctance to release information by insurance companies and other operators in the industry, prevented further investigation.

Originality/value

The study serves as an information source for investors in the insurance industry.

Details

The Journal of Risk Finance, vol. 9 no. 5
Type: Research Article
ISSN: 1526-5943

Keywords

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Article

Isaac Akomea-Frimpong, Charles Andoh and Eric Dei Ofosu-Hene

This paper aims to measure the extent of effects of insurance fraud on the financial performance of insurance companies in Ghana. It also examines the causes and stringent…

Abstract

Purpose

This paper aims to measure the extent of effects of insurance fraud on the financial performance of insurance companies in Ghana. It also examines the causes and stringent measures that can be used to fight against insurance fraud.

Design/methodology/approach

Primary and secondary data obtained from 39 insurers in Ghana are used in this paper. A multiple regression model is used to determine the relationship between financial performance and insurance fraud variables.

Findings

The results from the model indicate that statistically insurance fraud has a significant negative effect on the annual return on assets (financial performance) of insurers in Ghana. Also, weak internal controls, poor remuneration of employees, falsified documents, deliberate acts of policyholders to profit from the insurance contract and inadequate training for independent brokers are found to be the major causes of insurance fraud in Ghana. To deter insurance fraud, effective internal fraud policy, rigorous assessment of insurance policies and claims, adequate training for independent brokers on insurance fraud and modern information technology tools are paramount in fighting this menace in Ghana.

Research limitations/implications

These findings are to have substantial impact on the techniques insurance companies will develop to fight insurance fraud and the policies that will be developed by governments and national insurance regulatory bodies to fight this menace.

Originality/value

The main value of this paper is the determination of the key variables that constitute insurance fraud and their impacts on the annual financial performance of insurance companies in Ghana.

Details

Journal of Financial Crime, vol. 23 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

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