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Article
Publication date: 26 January 2021

Biju Mathew and Sunitha Sivaraman

This paper analyses the relationship between financial sector development (FSD) and life insurance inclusion in India during the period from 1971–1972 to 2016–2017. The…

Abstract

Purpose

This paper analyses the relationship between financial sector development (FSD) and life insurance inclusion in India during the period from 1971–1972 to 2016–2017. The study analyses the effect of financial deepening on life insurance inclusion in India.

Design/methodology/approach

The study employs augmented Dickey–Fuller (ADF) unit roots test to check the stationarity properties of the time series data. It estimates a life insurance inclusion model using the auto-regressive distributed lag model (ARDL) bounds testing approach to cointegration.

Findings

The study finds evidence of a cointegrating relationship between financial deepening and life insurance inclusion in India. A significant error correction coefficient indicates automatic adjustments to short-run disequilibrium, reinforcing the cointegrating relationship between financial sector and life insurance inclusion.

Research limitations/implications

A major limitation of the study is that it excludes the first-time sum assured (FSA) contributed by the private sector life insurance companies due to lack of data availability.

Practical implications

The results of the study call for faster expansion of the financial sector and provision of a low interest rate regime in the Indian economy. The study invokes the need for sufficient training to the personnel in the banking and non-banking institutions to cater to the complex needs of life insurance buyers.

Originality/value

The paper estimates the link between FSD and life insurance inclusion and introduces a new measure of life insurance demand, the life insurance inclusion, measured using the FSA.

Details

International Journal of Social Economics, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 2 December 2019

Segundo Camino-Mogro and Natalia Bermúdez-Barrezueta

The purpose of this paper is is to identify the main determinants of insurance profitability on life and non-life segments to obtain which variables affect in each market…

Abstract

Purpose

The purpose of this paper is is to identify the main determinants of insurance profitability on life and non-life segments to obtain which variables affect in each market of the Ecuadorian insurance sector.

Design/methodology/approach

The authors use a large panel data set with financial information from 2001 to 2017 and estimate the determinants through a panel corrected standard errors regression.

Findings

The authors found that net premiums, technical reserves, capital ratio and score efficiency are micro-determinants in the life insurance sector, whereas in the non-life sector, the micro-determinants include also claim level and liquidity ratio; moreover, the authors found that HHI is a determinant of profitability only in the life insurance. Among the macro determinants set, the authors found that the interest rate has also a significant impact both in the life and non-life insurance.

Originality/value

The authors analyze a dollarized emerging country, which is the first time in this kind of studies. The authors also include the structure-conduct-performance and relative market power paradigm as well as the ES hypothesis, calculated through the data envelopment analysis, as determinants of insurance profitability. Finally, this is the first research to examine the determinants of profitability in Latin American and Caribbean insurers.

Details

International Journal of Emerging Markets, vol. 14 no. 5
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 2 September 2019

Ashiq Mohd Ilyas and S. Rajasekaran

The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of efficiency, productivity and returns-to-scale…

Abstract

Purpose

The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of efficiency, productivity and returns-to-scale economies. In addition to this, it identifies the determinants of efficiency.

Design/methodology/approach

This study employs a two-stage data envelopment analysis (DEA) bootstrap approach to estimate the level and determinants of efficiency. In the first stage, the DEA bootstrap approach is employed to estimate bias-corrected efficiency scores. In the second stage, the truncated bootstrapped regression is used to identify the effect of firm-level characteristics on the efficiency of insurers. Moreover, the bootstrapped Malmquist index is used to examine the productivity growth over the observation period 2005–2016.

Findings

The bootstrapped DEA results show that the Indian non-life insurance sector is moderately technical, scale, cost and allocative efficient, and there is a large opportunity for improvement. Moreover, the results reveal that the public insurers are more cost efficient than the private insurers. It is also evident that all the insurers irrespective of size and ownership type are operating under increasing returns to scale. Malmquist index results divulge an improvement in productivity of insurers, which is attributable to the employment of the best available technology. Bootstrapped DEA and bootstrapped Malmquist index results also show that the global financial crisis of 2008 has not severely affected the efficiency and productivity of the Indian non-life insurance sector. The truncated regression results spell that size and reinsurance have a statistically significant negative relationship with efficiency. It also shows a statistically significant positive age–efficiency relationship.

Practical implications

The results hold practical implications for the regulators, policy makers, practitioners and decision makers of the Indian non-life insurance companies.

Originality/value

This study is the first of its kind that comprehensively investigates different types of robust efficiency measures, determinants of efficiency, productivity growth and returns-to-scale economies in the Indian non-life insurance market for an extended time period.

Details

Benchmarking: An International Journal, vol. 26 no. 7
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 11 January 2013

Amlan Ghosh

The role of financial institutions and financial intermediaries in fostering the economic growth by improving the efficiency of capital accumulation, encouraging savings…

Abstract

Purpose

The role of financial institutions and financial intermediaries in fostering the economic growth by improving the efficiency of capital accumulation, encouraging savings and ultimately improving the productivity of the economy has been well accepted by now. Recent studies show that the insurance industry can improve the economic growth through financial intermediation, risk aversion and generating employment. This study aims to find the relationship between life insurance industry and economic development in India.

Design/methodology/approach

The study uses the VAR‐VECM model to find out the long run and short run relationship (if any) between life insurance growth and economic growth along with Granger causality test to suggest any causal relationship.

Findings

This study finds that there is long term relationship between life insurance industry and economic development in India. And the Granger causality test suggests that life insurance sector improves the overall economic development in India and the reverse is not significant.

Research limitations/implications

The only limitation to study the relationship between life insurance sector development and economic development is the data set which has been used is annual data as the quarterly data were not available for insurance industry.

Practical implications

The study documented the long run relationship between life insurance industry and economic development in India and finds that the life insurance sector improves the overall economic development in India. This would help us to understand the implications of the life insurance market development in the post reform era.

Originality/value

There is a dearth of literature on the Indian economy in relation to the insurance sector, specifically the life insurance sector. This is the first attempt to study the impact of life insurance development on Indian economy after the reforms initiated in the insurance sector.

Details

Journal of Asia Business Studies, vol. 7 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 9 May 2008

Haemala Thanasegaran and Bala Shanmugam

Owing to the vital role played by the insurance sector in the economic growth of a country, the purpose of this paper is to highlight the serious threat posed by money…

Abstract

Purpose

Owing to the vital role played by the insurance sector in the economic growth of a country, the purpose of this paper is to highlight the serious threat posed by money laundering activities in exploiting the insurance industry, from the Malaysian perspective.

Design/methodology/approach

Provides a description of the risks posed by money laundering in the insurance sector, along with some useful case examples as illustration. Highlights the measures developed and adopted to control money laundering in the Malaysian insurance sector, with some thoughts on the importance of staying vigilant, as it is the only way in which to effectively counter the menace of money laundering in the sector.

Findings

Research shows that two‐thirds of the cases worldwide associated with money laundering in the insurance sector, related to life insurance products, with general insurance accounting for most of the remaining third of the cases reported. Apart from this, insurance intermediaries like agents and brokers, who are an important direct distribution channel for the sector, are easily subject to exploitation by money launderers.

Practical implications

The practical implication of this paper is to stress the importance of detecting signs of money laundering activities, as early prevention is the best alternative for insurance companies in countering money laundering in the industry.

Originality/value

The formal reporting measures put in place by the Anti‐Money Laundering Act 2001 are a step in the right direction by the Malaysian Government. However, this paper serves as a reminder that in spite of such measures, the insurance sector is particularly vulnerable to money laundering activities, owing to the sector's rapid growth in offering innovative and sophisticated products and services worldwide. Thus, this paper makes for a useful read for practitioners, academics, policymakers and students alike.

Details

Journal of Money Laundering Control, vol. 11 no. 2
Type: Research Article
ISSN: 1368-5201

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Case study
Publication date: 1 October 2011

Krishnaveni Muthiah

International business/International marketing.

Abstract

Subject area

International business/International marketing.

Study level/applicability

Courses: the case is directly related to courses on “International Business” and “International Marketing” in the Master of Business Administration programme.

Training programmes: management development programmes for working executives, on the topics “Business across borders”, “Business stabilization in foreign markets”.

Case overview

In 1999, the liberalization of the insurance sector as per the recommendations of the Malhotra committee gave way for privatization and foreign firms entered this sector through joint ventures. The business growth, which was enjoyed by these firms from 1999 to 2008, was tremendous. The growth percentage started declining following the global economic downturn in the capital markets. This situation compelled the insurance firms to re-look into their business strategy. On one hand whatever growth they had, 80 percent of it was through unit linked insurance plans depending on the capital market. On the other, it was identified that in a country like India the untapped market potential was among the rural millions. Reaching those people who are at the bottom of the pyramid necessitated a completely new business model to be developed as the need of the hour. The take stock of the position at this vnjuncture is the crux of the present case study, which envisages finding out alternative delivery models to suit the Indian rural market taking into account the intrinsic nature of life insurance and the basic living styles and mentality of the rural folk.

Expected learning outcomes

After discussion and analysis of this case, students will be able to:

  • understand how market culture in a target country differs from that in the home country;

  • appreciate how challenges in a developing country market have their own unique features to be understood;

  • identify various courses of action and evaluate them on the basis of the host country factors;

  • understand the “international planning process”; and

  • appreciate how important it is for a country manager of a multinational firm to plan and execute the marketing mix suited to the inherent qualities of the target market.

understand how market culture in a target country differs from that in the home country;

appreciate how challenges in a developing country market have their own unique features to be understood;

identify various courses of action and evaluate them on the basis of the host country factors;

understand the “international planning process”; and

appreciate how important it is for a country manager of a multinational firm to plan and execute the marketing mix suited to the inherent qualities of the target market.

Supplementary materials

Teaching notes.

Details

Emerald Emerging Markets Case Studies, vol. 1 no. 4
Type: Case Study
ISSN: 2045-0621

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Article
Publication date: 6 January 2021

Ashiq Mohd Ilyas and S. Rajasekaran

This paper aims to measure the change and the sources of change in total factor productivity (TFP) of the Indian non-life insurance sector over the period 2005–2016.

Abstract

Purpose

This paper aims to measure the change and the sources of change in total factor productivity (TFP) of the Indian non-life insurance sector over the period 2005–2016.

Design/methodology/approach

This study employs the bootstrapped Malmquist index (MI) to assess the changes in the TFP and adopts a decomposition approach proposed by Balk and Zofío (2018). Moreover, it utilises truncated regression to identify the determinants of the TFP. In addition, it employs Wilcoxon-W test and t-test to scrutinise the difference between the state-owned and the private insurers in terms of variations in TFP and its various components.

Findings

The results divulge a miniature improvement in TFP of the insurance sector, which is primarily attributable to the improvement in scale efficiency (economies of scale). The results also reveal that there are no significant TFP differences across the ownership. However, private insurers have better scale efficiency and lower input-mix efficiency than state-owned insurers. In addition, the results unveil that size, diversification and reinsurance have a negative impact on the TFP, while age has a positive impact on it.

Practical implications

The results may help the policymakers to frame new consolidation policies. Moreover, the findings may guide the decision-makers of the Indian non-life insurance companies to abate inefficiency and improve TFP.

Originality/value

This study estimates bias-corrected changes in TFP and efficiency in the non-life insurance sector. Moreover, it adopts an elaborated decomposition of the MI to identify the true sources of change in the TFP.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 21 October 2019

Ashiq Mohd Ilyas and S. Rajasekaran

The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of total factor productivity (TFP) over the period 2005–2016.

Abstract

Purpose

The purpose of this paper is to analyse the performance of the Indian non-life (general) insurance sector in terms of total factor productivity (TFP) over the period 2005–2016.

Design/methodology/approach

This study utilises Färe‒Primont index (FPI) to access the change in TFP and its components: technical change, technical efficiency and mix and scale efficiency over the observation period. Moreover, it employs the Mann–Whitney U-test to scrutinise the difference between the public and the private insurers in terms of growth in productivity.

Findings

The results reveal that the insurance sector possesses a very low level of TFP. Also, the results divulge an improvement of 11.98 per cent in TFP of the insurance sector at an annual average rate of 12.41 per cent over the observation period. The growth in productivity is mainly attributable to the improvement of 10.81 per cent in the scale‒mix efficiency. The progress in scale‒mix efficiency is mainly the result of improvements in residual scale and residual mix efficiency. The results also show that the privately owned insurers have experienced a high productivity growth rate than the state-owned insurers.

Practical implications

The results hold practical implications for the regulators, policymakers and decision makers of the Indian non-life insurance companies.

Originality/value

This study is the first of its kind to use FPI, which satisfies all economically relevant axioms and tests defined by the index number theory to comprehensively access the change in TFP of the Indian non-life insurance sector.

Details

International Journal of Productivity and Performance Management, vol. 69 no. 4
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 18 September 2017

Biju Mathew and Sunitha Sivaraman

The purpose of this paper is to analyze the macroeconomic determinants of life insurance demand in India. The recent decline in life insurance activity calls for a study…

Abstract

Purpose

The purpose of this paper is to analyze the macroeconomic determinants of life insurance demand in India. The recent decline in life insurance activity calls for a study on the factors influencing life insurance demand in India.

Design/methodology/approach

This study employs econometric techniques like augmented Dickey-Fuller test, Johansen cointegration test, vector error correction models and the Granger causality test to estimate the macroeconomic predictors of life insurance demand in India, during the period 1980-1981 to 2013-2014.

Findings

Financial sector development and inflation positively influence life insurance demand in India. The real rate of interest and income are negatively related to life insurance consumption. The study finds an insignificant relation between the level of social security expenditure and life insurance buying. Financial sector development is found to Granger-cause life insurance demand.

Research limitations/implications

Product-wise analysis of life insurance demand is not attempted due to lack of unit-level data. The impact of regulatory changes on life insurance demand in India is not attempted.

Practical implications

Intervention by the policy makers is required to arrest the decline of life insurance activity in India. Efforts are required to widen the financial sector of the Indian economy to accelerate the growth of life insurance activity.

Originality/value

The paper introduces a new measure of life insurance demand, the total regular new business premium, in the estimation of life insurance demand determination.

Details

International Journal of Emerging Markets, vol. 12 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 15 October 2019

Rejikumar G., Raja Sreedharan V. and Raiswa Saha

Consumer behavior, in the context of general insurance, is worth exploring to formulate growth strategies for insurance sector in India in light of the proposed structural…

Abstract

Purpose

Consumer behavior, in the context of general insurance, is worth exploring to formulate growth strategies for insurance sector in India in light of the proposed structural changes. Indian consumers attract global players due to untapped potential and favorable policy measures initiated for higher foreign direct investments. The purpose of this paper is to understand the prevailing level of service quality as perceived by insurance customers in India in the presence of certain contextual antecedents and moderators.

Design/methodology/approach

Perceptions about constructs like customer risk dispositions, awareness, past experiences, customer involvement, choice overload, service quality and satisfaction of 256 customers were collected using a questionnaire survey. A variance-based structural equation modeling helped to identify significant linkages among the constructs.

Findings

In order to assess service quality levels, a 15-item scale having the infrastructure, employees, agents and product dimensions was found valid and reliable. Choice overload and customer involvement were found to moderate the influence of antecedents and service quality, respectively. The influence of choice overload on quality perceptions is insignificant. The study concludes that the existing risk beliefs are insufficient, and experiences have less predictive contribution to quality perceptions.

Research limitations/implications

Theoretically, this study examined the process of satisfaction development from service quality perceptions. This study offers insights for developing theories to portray future consumer behavior where more dependence of self-service technologies is expected to dominate service delivery mechanisms in insurance. The study informs that general insurance customers in India prefer more diversified products, more customer-centric employees/agents and better technical quality.

Practical implications

The findings of this study contribute to the understanding of the prevailing insurance consumer behavior in the general insurance sector of India and help insurance service providers in streamlining their strategies for better insurance penetration and reduced lapse rate.

Originality/value

This study helps in understanding the emerging trends in general insurance buying behavior in India.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

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