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Publication date: 19 June 2019

Yayun Yan and Sampan Nettayanun

Our study explores friction costs in terms of competition and market structure, considering factors such as market share, industry leverage levels, industry hedging…

Abstract

Our study explores friction costs in terms of competition and market structure, considering factors such as market share, industry leverage levels, industry hedging levels, number of peers, and the geographic concentration that influences reinsurance purchase in the Property and Casualty insurance industry in China. Financial factors that influence the hedging level are also included. The data are hand collected from 2008 to 2015 from the Chinese Insurance Yearbook. Using panel data analysis techniques, the results are interesting. The capital structure shows a significant negative relationship with the hedging level. Group has a negative relationship with reinsurance purchases. Assets exhibit a negative relationship with hedging levels. The hedging level has a negative relation with the individual hedging level. Insurers have less incentive to hedge because it provides less resource than leverage. The study also robustly investigates the strategic risk management separately by the financial crises.

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Article
Publication date: 1 January 1999

PETER NAKADA, HEMANT SHAH, H. UGUR KOYLUOGLU and OLIVIER COLLIGNON

Is the U.S. property & casualty (P&C) insurance industry overcapitalized? Many practitioners and industry observers claim that the industry is awash in capital, and that…

Abstract

Is the U.S. property & casualty (P&C) insurance industry overcapitalized? Many practitioners and industry observers claim that the industry is awash in capital, and that this excess capital has driven prices to historical lows. Others claim that the industry is undercapitalized relative to a large but plausible natural disaster, such as a large Tokyo earthquake, or a Category 5 hurricane through Miami — a “super catastrophe” in industry jargon.

Details

The Journal of Risk Finance, vol. 1 no. 1
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 10 October 2008

William C. Lesch and Bruce Byars

The purpose of this paper is to review the management of consumer insurance fraud in the US propertycasualty market, attending to definition, prevalence, insurer and

Abstract

Purpose

The purpose of this paper is to review the management of consumer insurance fraud in the US propertycasualty market, attending to definition, prevalence, insurer and regulatory responses, and outcomes. A social marketing campaign is offered as a partial, long‐term solution.

Design/methodology/approach

This paper explicates the difficulties associated with defining and measuring consumer insurance fraud, then models the system of factors now in place in redress.

Findings

Little agreement was found for a common definition of consumer insurance fraud and this was explained in part due to the decentralization of insurance regulation, competitive factors, and inconsistency in claims processing. The paper concludes by offering a social marketing campaign as a tool for reducing the incidence and severity of single‐claims fraud, the latter believed to be the largest source of consumer insurance fraud.

Originality/value

This paper affords a macro‐level view of a common and expensive social problem, suggests a practical solution with the promise of reducing long‐term losses at all levels.

Details

Journal of Financial Crime, vol. 15 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 8 March 2021

Zhiguang Li, Yaokuang Li and Wei Zhang

Based on the perspective of complexity theory, the operation process of property insurance companies can be regarded as a complex dynamic nonlinear chaotic system. This…

Abstract

Purpose

Based on the perspective of complexity theory, the operation process of property insurance companies can be regarded as a complex dynamic nonlinear chaotic system. This paper aims to measure the operating efficiency of 29 Chinese domestic property and casualty (P&C) companies and 18 foreign-invested P&C companies from 2011 to 2017 and outline the path to achieving high-quality development.

Design/methodology/approach

The data were obtained from the Chinese Insurance Yearbook and China Statistical Yearbook 2012–2018. The data envelopment analysis method was used to calculate the technical efficiency of property insurance companies and fuzzy set qualitative comparative analysis is used for configuration analysis of determinants affecting technical efficiency.

Findings

This paper founds the average technical efficiency of Chinese domestic P&C insurance companies was 0.914 and that of foreign-invested P&C insurance companies was 0.895. The average total factor productivity of Chinese domestic P&C insurance companies was 1.058 and that of foreign-invested P&C insurance companies was 1.051. There were three modes to improve the company’s technical efficiency, with high loss ratio and low reinsurance ratio, poor employee education and higher leverage ratio and high leverage ratio and low reinsurance ratio as the core conditions.

Originality/value

This study puts forward four applicable, targeted and proven ways to improve the technical efficiency of China’s P&C insurance industry. These configurations were verified by the cases of existing property insurance companies, which can provide practical references for the insurance industry.

Details

Chinese Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-614X

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Article
Publication date: 31 August 2012

Maria Teresa Medeiros Garcia

The purpose of this paper is to investigate empirically the relationship between property‐liability insurance premiums and economic and financial development in the case…

Abstract

Purpose

The purpose of this paper is to investigate empirically the relationship between property‐liability insurance premiums and economic and financial development in the case of Portugal, assuming a supply‐leading causality pattern of development. In other words, the expansion of the financial system precedes the demand for services.

Design/methodology/approach

The paper conducts OLS estimations between premiums and the gross domestic product (GDP) in order to evaluate the economic growth, in addition to the ratio of the broader definition of money (M2) to GDP and the ratio of currency to demand deposits (M1/M2), in order to assess financial development.

Findings

The level of the gross domestic product is the only factor explaining the level of property‐liability insurance demand in Portugal.

Originality/value

To the best of the author's knowledge, this is the first attempt to examine determinants of property‐liability casualty insurance in Portugal, using time series data.

Details

Journal of Economic Studies, vol. 39 no. 4
Type: Research Article
ISSN: 0144-3585

Keywords

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Article
Publication date: 13 March 2007

Nick Palmer, Scott Tanner, Christine Detrick and Ingo Wagner

The purpose of this article is to identify what truly propels property and casualty insurance industry leaders to reach their peak performance.

Abstract

Purpose

The purpose of this article is to identify what truly propels property and casualty insurance industry leaders to reach their peak performance.

Design/methodology/approach

Selection: from an initial list of 706 insurers worldwide, the authors screened for publicly held companies that derived at least 60 percent of their annual revenues from sales of property and casualty products and for which at least five years of detailed financial data were available. The final sample included only companies from advanced economies of North America, Europe and Australia, for a total of 86 insurers. Variables: the regression analysis investigated possible correlations between total shareholder returns and 17 measures of business mix and financial performance, including total revenue growth, total net premium growth and profitability growth. Time period: The authors ran tests on data covering the decade from 1994 through the end of 2004.

Findings

Consistent, sustainable revenue growth is the surest path to superior shareholder returns.

Practical implications

What sets the top performers in the insurance industry apart is an ability to master two of today's thorniest growth challenges: (1) high‐performance insurers cultivate organic growth by identifying their most valuable customers and investing to increase sales to them; by recruiting new clients through referrals and by lifting retention rates; (2) insurers that rely on mergers and acquisitions to boost revenues make regular, modest‐sized deals to add real value, and they integrate their new acquisitions quickly and seamlessly.

Originality/value

Property and casualty insurers that achieve top‐quartile revenue growth and produce exceptional returns for shareholders weave organic growth and acquisitions into a virtuous cycle of revenue expansion, pursuing deals that reinforce their ability to deliver customer value.

Details

Strategy & Leadership, vol. 35 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 1 April 2002

Philip G. Skinner, J. Schear and Seth S. Katz

The tragic events of 11 September 2001 have caused people in all walks of life around the world to pause and reflect about what is important to them. With the World Trade…

Abstract

The tragic events of 11 September 2001 have caused people in all walks of life around the world to pause and reflect about what is important to them. With the World Trade Center, one of the icons of global capitalism and New York’s skyline, reduced to a heap of burned and twisted rubble at ‘Ground Zero’ in lower Manhattan, the world of commercial real estate is undergoing a time of reflection in the wake of these unbelievable events. While the catalyst for this time of reflective analysis was at the same time both horrific and compelling, the careful consideration of relevant lease issues and of the need for disaster recovery planning that has resulted will help everyone to be better prepared for unexpected events of any kind in the future. The purpose of this paper is to identify three standard lease provisions that have always been important, but now bear even closer scrutiny in the aftermath of the catastrophic losses of 11 September. These provisions are: Casualty; Interruption or Unavailability of Services; and Insurance. Most form leases contain provisions that address these subjects and raise various issues that are ripe for re‐examination. This paper discusses how such issues might be analysed (or re‐analysed) in the aftermath of this senseless tragedy. Please note that the legal conclusions, practices and norms outlined in this paper are generalised from a United States perspective and, as such, the norms and potential solutions may vary in other countries and on a case‐by‐case basis within a country. Further, the starting point and, often, the ending point in the analysis of any leasing issue is the specific language of the lease, which itself is subject to any applicable laws of the relevant legal jurisdiction. It is important to consider the issues and analysis discussed in this paper in light of the specific market norms and laws of the jurisdiction which are applicable.

Details

Journal of Corporate Real Estate, vol. 4 no. 2
Type: Research Article
ISSN: 1463-001X

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Article
Publication date: 1 June 2004

Joseph Calandro and Scott Lane

The property and casualty insurance industry has historically focused on the underwriting ratio as the primary measure of operating performance. Many dramatic changes have…

Abstract

The property and casualty insurance industry has historically focused on the underwriting ratio as the primary measure of operating performance. Many dramatic changes have occurred in this industry and its operating environment over the past 30 years. These changes have dramatically decreased opportunities for underwriting profits, forcing the industry to rely more on investment returns and careful reinsurance. An alternative performance measurement system, the insurance performance measure (IPM), is presented and illustrated. The IPM integrates these other areas of operating activity into a more comprehensive measure of profitability.

Details

Measuring Business Excellence, vol. 8 no. 2
Type: Research Article
ISSN: 1368-3047

Keywords

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Article
Publication date: 1 October 2003

Joseph Calandro and Scott Lane

The property and casualty (P&C) insurance industry has historically focused on the underwriting or combined ratio as the primary measure of operating performance. Many…

Abstract

The property and casualty (P&C) insurance industry has historically focused on the underwriting or combined ratio as the primary measure of operating performance. Many dramatic changes have occurred in this industry and its operating environment over the past 30 years, which have reduced the importance of the underwriting ratio. An alternative performance measurement system, the insurance performance measure (IPM), is presented and illustrated. The IPM integrates all areas P&C operating activity into a measure more comprehensive that the underwriting ratio.

Details

Management Decision, vol. 41 no. 8
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 31 December 2003

Stephen Mixter and Michael Owendoff

The intent of this paper is to provide an overview of the principal provisions of the Terrorism Risk Insurance Act of 2002 (the ‘Act’),1 which became law in the USA on…

Abstract

The intent of this paper is to provide an overview of the principal provisions of the Terrorism Risk Insurance Act of 2002 (the ‘Act’),1 which became law in the USA on 26th November, 2002, and the practical effects which the Act has had on the state of terrorism insurance coverage as it had evolved between 11th September, 2001 and the passage of the Act. The Act voids some of the exclusions which had made their way into insurance policies (particularly post‐9/11) relating to losses from certain ‘acts of terrorism’ (as defined by the Act) and requires insurers meeting certain criteria to ‘make available’ terrorism insurance coverage to their insureds. The Act also establishes a temporary federal reinsurance programme which provides a system of shared public and private compensation for insured losses resulting from certain certified acts of terrorism. From the standpoint of the average insured, however, the practical impact of the Act has been far less dramatic than may appear on the face of it. As The Department of the Treasury explained in its Final Rule,2 one of the main purposes of the Act was to address market disruptions that resulted in the aftermath of the September 11th terrorist attacks on the USA and to ensure the availability and affordability of property and casualty insurance for certain risks associated with acts of terrorism. In addition, the Act was designed to provide a transitional period for the private insurance markets to stabilise, thereby allowing insurance companies to resume pricing terrorism insurance coverage. The Act also sought to build capacity in the insurance industry to absorb any future losses, while preserving insurance regulation and consumer protections in the individual states.

Details

Journal of Corporate Real Estate, vol. 6 no. 1
Type: Research Article
ISSN: 1463-001X

Keywords

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