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This research explores to answer the question: What accounts for the substantial underwriting losses in the Ghanaian insurance industry?

Thirty-four (34) insurers' audited financial reports covering the period of 2007 to 2017 were analysed through dynamic panel regression to uncover the underlying causes of high underwriting losses in the Ghanaian insurance industry.

The findings indicate that efforts at increasing market share by overtrading add no value to insurers underwriting profitability. The underwriting risk suggests that the industry charges disproportionately too small premiums for the risks it underwrites. This may indicate under-pricing by some insurers to grow their customer base.

The findings have implications for managerial efficiency and risk management structures that align compensation with underwriting efficiency.

The association between managerial preference and the underwriting performance of insurers in emerging markets has rarely been researched. This study responds to this knowledge challenge.

The aim of this research is to assess the financial performance of the life insurance industry of an emerging economy. In particular the study delves into the major determinants of the profitability of the life insurance industry of Ghana. The study also examines the relationship among the three measures of insurers' profitability, which are investment income, underwriting profit and the overall (total) net profit.

The annual financial statements of ten life insurance companies covering a period of 11 years (2000‐2010) were sampled and analyzed through panel regression.

The findings indicate that whereas gross written premiums have a positive relationship with insurers' sales profitability, its relationship with investment income is a negative one. Also, the results showed that life insurers have been incurring large underwriting losses due to overtrading and price undercutting. The results further revealed a setting‐off rather than a complementary relationship between underwriting profit and investment income towards the enhancement of the overall profitability of life insurers.

The policy implications of this study for the stakeholders of the life insurance industry are enormous. For instance, insurers must have well‐resourced actuary departments to perform price validation of all policies in order to prevent over‐trading and price undercutting by insurance marketing agents. In addition, the intention of the NIC to adopt a risk‐based approach in its supervision is not only timely but a very significant move that will improve upon the accounting and records keeping standards of the industry as well as the governance and risk management structures of the sector.

Being too obsessed with premium growth without adequate price validation can lead to self‐destruction such as huge underwriting losses. Large underwriting losses can lead to insurance insolvency during periods of cluster claims.

This study fulfills an urgent need to investigate the things that are crucial for the survival, growth and profitability of life insurers in an emerging economy.

The paper sets out to use the loss ratio series of Switzerland, Germany, the USA and Japan, to test whether underwriting cycles still exist internationally and to identify possible structural changes.

Based on financial theory and insurance pricing theory, co‐integration analysis was performed to check possible causes of structural changes.

All four countries have breaks in different years. This result leads to the hypothesis that the factors affecting underwriting cycles are mainly country‐specific, such as economic environment and regulations, rather than global/international. Although the financial theory and the insurance pricing theory suggest that the loss ratio series should be co‐integrated with the interest rate series with co‐integrating coefficient −1, the empirical results do not support the theories.

More detailed analysis for the time series characteristics for countries other than the USA is presented to investigate the possible existence of underwriting cycles.

Health insurance is one of the major contributors of growth of general insurance industry in India. It alone accounts for around 29% of total general insurance premium income earned in India. The growth of this sector is important from the perspective of overall growth of general insurance Industry. At the same time, problems in this sector are also many which are affecting its performance.

The paper provides an understanding on performance of health insurance sector in India. This study attempts to find out how much claims and commission and management expenses it has to incur to earn certain amount of premium. Methodology used for the study is regression analysis to establish relationship between dependent variable (Profit/Loss) and independent variable (Health Insurance Premium earned).

Findings of the study indicate that there is significant relationship between earned premium and underwriting loss. There has been increase of premium earnings which instead of increasing profit for the sector in fact has increased underwriting loss over the years. The earnings of the sector is growing at compounded annual growth rate of 27% still it is unable to earn underwriting profit.

This study is self-driven based on secondary data obtained from insurance regulatory and development authority site.

This article discusses the three approaches for setting capital charges for operational risk as proposed by the New Basel Accord. The article addresses a series of questions raised by the Basel proposal related to defining, measuring, and reserving for operational risk. The author suggests that capital reserves may actually serve as a deterrent to reducing operational losses.

In recent years, the frequency and severity of cybersecurity incidents have prompted customers to seek out specialized insurance products. However, this has also presented insurers with operational challenges and increased costs. The assessment of risks for health systems and cyber–physical systems (CPS) necessitates a heightened degree of attention. The significant values of potential damages and claims request a solid insurance system, part of cyber-resilience. This research paper focuses on the emerging cyber insurance market that is currently in the process of standardizing and improving its risk analysis concerning the potential insured entity.

The authors' approach involves a quantitative analysis utilizing a Likert-style questionnaire designed to survey cyber insurance professionals. The authors' aim is to identify the current methods used in gathering information from potential clients, as well as the manner in which this information is analyzed by the insurers. Additionally, the authors gather insights on potential improvements that could be made to this process.

The study the authors elaborated it has a particularly important cyber and risk components for insurance area, because it addresses a “niche” area not yet proper addressed in specialized literature – cyber insurance. Cyber risk management approaches are not uniform at the international level, nor at the insurer level. Also, not all insurers can perform solid assessments, especially since their companies should first prove that they are fully compliant with international cyber security standards.

This research has concentrated on analyzing the current practices in terms of gathering information about the insured entity before issuing the cyber insurance policy, level of details concerning the cyber security posture of the insured entity and way such information should be analyzed in a standardized and useful manner. The novelty of this research resides in the analysis performed as detailed above and the proposals in terms of information gathered, depth of analysis and standardization of approach made. Future work on the topic can focus on the standardization process for analyzing cyber risk for insurance clients, to improve the proposal based also on historical elements and trends in the market. Thus, future research can further refine the standardization process to analyze in more depth the way this can be implemented and included in relevant legislation at the EU level.

Proposed improvements include proposals in terms of the level of detail and the usefulness of an independent centralized approach for information gathering and analysis, especially given the re-insurance and brokerage activities. The authors also propose a common practical procedural approach in risk management, with the involvement of insurance companies and certification institutions of cyber security auditors.

The study investigates the information gathered by insurers from potential clients of cyber insurance and the way this is analyzed and updated for issuance of the insurance policy.

The purpose of this paper is to examine the relationship between intellectual capital (IC) and profitability of insurance companies in Ghana.

Data on 36 life and non-life insurance companies from 2007 to 2011 are employed to estimate the value added intellectual coefficient of Pulic (2004, 2008). Using return on assets and underwriting profit as indicators of profitability, the ordinary least squares panel corrected standard errors of Beck and Katz (2005) is used in estimating the relationship in the presence of serial correlation and heteroskedasticity. Leverage, underwriting risk and insurers’ size are used as control variables.

Non-life insurers have high IC performance comparative to life insurers. This study finds a significant positive relationship between IC and profitability of insurers in Ghana while human capital efficiency is the main driver of insurers’ IC performance.

The study discusses relevance of IC for management of insurance companies in Ghana and other emerging insurance markets in Africa.

This appears to be the first study to examine the impact of IC on profitability of a developing insurance market in Africa.

The purpose of this paper is to examine the effect of leverage on the financial performance of general insurance companies in Malaysia, and investigate whether the leverage‐performance relationship is a function of or contingent on the extent of product diversification.

The sample consisted of the entire population of authorized general insurance companies operating during the period from 2006 to 2009 in Malaysia. A total of 94 observations were analysed. All the data used were sourced from the Malaysian Central Bank's (BNM) database.

It is found that leverage is negatively associated with firm performance. However, there is a significant interaction effect between leverage and product diversity on firm performance. The finding indicates that leverage could be beneficial or detrimental to the financial performance of general insurance firms, contingent on the extent of product diversity of the firm.

As the scope of study is limited to the general insurance industry and the sample size is small, the findings of the study must be interpreted with caution and the results may not be generalizable to the life insurance sector or other industry.

Findings of prior empirical studies on leverage‐performance relationship and effect of insurance product diversification are rather mixed and inconclusive. Based on analysis of a single insurance (general) sector that is highly regulated, the paper provides empirical evidence that the benefits of product diversification strategy are contingent on level of the firm's leverage. The paper hence, enhances understanding and contributes to the existing literature on impact of leverage, product diversification on performance of the highly regulated general insurance firms in a developing country.

In less competitive markets, firms with market power are likely to exercise pricing power by setting output prices above their marginal cost, inducing welfare losses from resource misallocation, managerial inefficiency and market instability. In order to address such market imperfections, it is important for regulatory authorities to identify the sources of pricing power and devise policies to address their adverse effects. In this context, the purpose of this paper is to undertake an empirical analysis to identify the determinants of pricing power in the South African non-life insurance market.

The authors estimate the Lerner competitive index as the proxy for pricing power using annual data on 79 firms from 2007 to 2012. In the second stage, the paper employs panel regression techniques in the ordinary least squares, random effects and generalised method of moment’s estimations to examine the effect of insurer level characteristics on pricing power.

The authors find the market to be characterised by firms with high pricing power. Domestic-owned insurers are found to exercise high pricing power compared with foreign-owned insurers. The authors also identify size, cost efficiency, product line diversification, market concentration, leverage and reinsurance contracts as the significant predictors of pricing power in the market. Finally, through a quantile regression analysis, the authors find the effect of cost efficiency, business line diversification and reinsurance to be heterogeneous across different quantiles of pricing power.

The findings provide regulatory authorities with useful indicators in addressing anti-competitive behaviour in high pricing power to enhance the stability of the insurance market and improve consumer welfare and economic development.

To the best of the authors’ knowledge, this is first paper to examine the determinants of pricing power and competitive behaviour in an insurance market.

Occasional, highly publicized examples of unethical behavior by executives of major businesses such as the unethical/illegal brokerage and financial reporting practices uncovered recently by New York Attorney General Eliot Spitzer's investigation of the insurance industry may be thought to have arisen from some rather unique set of ethical problems that differ significantly from the ethical dilemmas encountered daily by those working in the business. In reality, they did not. Instead, these highly publicized unethical activities on the part of leading brokerage firms and insurers are shown to be attributable to several of the same key ethical issues identified repeatedly by insurance professionals as presenting the greatest ethical challenges for those working in the insurance industry over the last decade and a half.