The aim of this research is to study the profitability of the insurance industry in Iran during the period of 20 years from 1993 to 2013. Research method is analytical and inductive post-event. Data related to the insurance and eco- nomic indicators are including the Premium of life insurance, Premium of non-life insurance, gross domestic product and inflation and profitability of Iranian insurance companies during the years 1993 to 2013 that were ex- tracted from the economic and insurance forms. The regression model and ARDL time series technique were used for data analysis. The research results showed that the Premium of life insurance has a positive effect on the profit- ability of insurance companies in Iran, but the Premium of non-life insurance has not had a significant effect on profitability, the economic indexes of re- search, namely GDP and inflation, have a positive and negative impact on the profitability of insurance companies in Iran, respectively.
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The main task of an actuary is to predict and value insurance cash flows. These predictions and valuations form the basis for premium calculation as well as for solvency considerations of an insurance company. As a consequence, and in order to be able to successfully run the insurance business, actuaries need to have a good understanding of such insurance cash flows. In most situations, insurance cash flows are not traded on deep and liquid financial markets. There- fore valuation of insurance cash flows basically means pricing in an incomplete financial market setting. Article 75 of the Solvency II Framework Directive (Directive 2009/138/EC) states “li- abilities shall be valued at the amount for which they could be transferred, or settled, between two knowledgeable willing parties in an arm’s length transaction”. The general understanding
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The sub-Saharan Africa countries has a combine popula- tion of 780 million is which is the ninth population of the world in 2011. With this population one might expect the sub-Saharan African to be one of the largest markets for insurance but the insurance sector only account for 0.2% of total world premium. The insurance penetration (pre- mium as percentage of GDP) in sub-Saharan is very low compare to other regions of the world. According to Swiss Re  between 2000 and 2011 the average grow- th rate of insurance premium in sub-Saharan Africa is 7.1% annually and in 2011 it reached about 8.9 billion USD. The oil producing countries and middle countries expe- rienced the highest growth of premium in sub-Saharan Africa. Based on Swiss Re report the six largest markets for insurance in Africa are South Africa, Nigerian Kenya, Angola, Namibia and Mauritius. These six countries have a combine market of 68%. The little fact provided shows that the SSA insurance markets sub-Saharan Africa are in a typical early phase of development, where the main focus lies on commercial lines of business in non-life and group business in life. Insurance penetration in SSA is very below the other regions of the world. However, it is only life insurance that is below expectation given the current level of income in Sub-Saharan Africa. Motor and business line related to the extraction of gas, oil and other renewable resources dominated while the personal non-life accounted for low percentage. The situation is not different in life insurance as individual take up of personal life insurance is very low while the group busi- ness dominates.
Rejda (1999) tells about underwriting cycle in non-life insurance. According to Rejda (1999), there exists a cyclical pattern in the underwriting results following which the property and casualty insurance and re-insurance premium, the profits and availability of coverage rise and fall over time. Property and liability Insurance markets fluctuate between the periods of tight underwriting standards and high premiums, called ‘hard’ insurance market, and periods of loose underwriting standards and low premiums, called ‘soft’ insurance market in the US market. As per Rejda (1999), these market conditions are direct or indirect effects of certain economic conditions. According to , in the US study, it was found that during the periods – 1956-1958, 1964-1966, 1972-1975, 1984- 1988, 1992-1994, 2001-2003, the insurance market was hard while during the remaining part there was a soft insurance market.
Husain Ashraf S and Nitika Kumari (2016) explained that over the last decade Indian insurance industry has experienced exceptional changes and confronted more difficulties. As an aftermath of deregulation and globalization foreign companies entered in an Indian market. The competitive pressures force many insurance companies to change corporate strategies in order to reduce operating cost, while keeping up or improving the quality of their services. Insurance earn their profits underwriting premium from various policies and investing in various securities as prescribed by the regulation body. Maraboina Sreedhar Babu(2015) studied that Indian insurance sector has got wide growth of development because huge amount of population. With the population of more than 100 crore, India requires insurance more than any other country. However insurance penetration in country
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There is little in the insurance literature on modelling how insurance premiums should be determined in a competitive market and how they respond to changes in the levels of premiums being offered by competitor companies (Daykin et al. 1994). Despite the fact that underwriting cycles in non-life insurance are known to be present and an objective analysis is needed for properly formulating underwriting strategies rather than just following the trends, such an analysis has not been done so far. It is widely observed that for a number of years premium rates decline to a point where the market, on average, is underwriting at a considerable loss, followed by a reverse trend of large increases in premium rates to the point where the market is making a substantial profit. During these underwriting cycles, it is observed that, individual insurance companies are following the market with their premium rates declining when the market average premium rate declines and increasing when the market average premium rate increases (Cummins and Outreville 1987, Daykin et al., 1994). A question arises here: What is the optimal premium strategy for an individual insurance company and how is this related to the market? This leads to the conclusion that there is a wide scope for investigation of this area.
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Kunreuther and Pauly (2006) make the point that taking on multiple risk makes it difficult for insurance companies to bring about diversification of risk and to identify the cause of damage (specifically, the authors use the example of properties lost in Hurricane Katrina in the U.S., which were difficult to determine whether they had been destroyed by wind or flood damage). The authors accordingly recommend provision of comprehensive insurance for residential properties that provide cover for both earthquake and flood damage. The sale of insurance products that encompass multiple risks would raise the frequency of making insurance payments, thereby relieving the issue of ignorable events, and provide an incentive for consumers to actually purchase such insurance policies. The same authors (Kunreuther and Pauly (2006)) also put forward a four stage insurance system, which consists of the self-reliant part (or the indemnity), the risk covered by policies from commercial insurance companies, the risk being transferred to reinsurance or CAT bonds, and the reinsurance of the federal or state government.
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However, these developments do not take into account that the assets that support future liabilities produce financial returns and so, non-discounted provisions overrate the real value of reserves. To avoid this problem, the regulation of many countries allows discounting future liabilities to quantify claim reserves. We consider that the interest rate for finding the present value of future claims will be estimated subjectively by the actuary and so, it is a very natural to quantify that magnitude with a FN. This is a relatively common hypothesis in non-life insurance, [1, 9, 12, 23], that extend financial pricing with fuzzy parameters [5, 16, 20, 25] to non-life insurance pricing.
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pioneer to usher Bancassurance into India. The company hopes to extensively utilize the SBI Group as a platform for cross- selling insurance products along with its numerous banking product packages such as housing loans, personal loans and credit cards. SBI’s access to over millions of accounts provides a vibrant base to build insurance selling across every region and economic strata in the country. India's rural market has huge potential that is still untapped by the insurance companies. Setting up their own networks entails such a huge cost, that no company would be interested in doing so. It helps the insurance companies to tap the market at a much lower cost. The penetration level of life insurance in the Indian market is considerably low at 2.3% of GDP with only 8% of the total population currently insured. Thus, Bancassurance provide an apparently viable
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1. More capital Inflow: FDI has the potential to meet India’s long term capital requirements to fund the building of infrastructures which is critical for the development of the country. Infrastructure has been the major factor which has restricted the progress of the Indian economy. Insurance sector has the capability of raising long term capital from the masses as it is the only avenue where people put in money for as long as 30 years and even more. An increase in FDI in insurance would indirectly be a boon for the Indian economy, the investments not withstanding but by making more people invest in long term funds to fuel the growth of the Indian economy.
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Unlike in the manufacturing sector during the license raj, a government license is not a guaranteed ticket for success in insurance and a task of establishing a strong competitive presence by private insurers is not easy. The new players are also aware that their entry is not going to be all that smooth and they have to take enormous pains to carve out a market share for themselves. Any insurance company, venturing newly into business, has, therefore, to be patient and prepared to sustain some start-up losses for the first few years. The new entrances are entering a different market and hence, even though they have new products already, they cannot offer them in India as they are. It is necessary for them to tailor them to local conditions and customer needs, which is again a matter of time. Moreover; the existing insurers enjoy a strong brand presence, well spread distribution networks and significant local knowledge and contacts parameters which can be matched by new players only over a period of time. The latter will target market niches because most lack the local relationships necessary for successful retail operations. Public and Private firms can coexist in liberalized markets and this can help enlarge the market. This is a matter of patience for the new companies which are just setting down, and it will not be until 2010 for the life side, and 2009 for the non life business that competition will really hot up. 57 Since some start up losses are inevitable, obviously, only those companies which
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Another bias may have arisen because we did not know the entire set of feasible plan choices. We assumed that all employees had access to each plan, but this assumption holds only for the FFS plans in our data. If the insurance opportunity set is not specified correctly in any given model, a relative premium index might put too much weight on plans that are not close substitutes, and too little weight on those that are close substitutes. In that instance, we might detect an appar- ent unresponsiveness of employees to changes in the relative premiums (ie, the overall relative price index is changing but the prices of the feasible plans do not). To investigate this issue, we examined responsiveness to 2 price indexes in this framework: one for the current plan relative to prices of close substitutes within the system of care (FFS or HMO) and another relative to average prices of plans in the other system of care.
The following paragraph throws some light on reviews made on various literatures pertaining to repudiation of claim and its redressal system. The goodness of an insurance company lies in the test of how they handle their consumer complaints. These consumer complaints in simple words become grievances. Indemnity becomes the bone of contention between the Insured and Insurer (Daniel, 1974). When we consider the important factors effecting the attitudes of the people towards life insurance, elements such as age, gender, level of education, in short demographics plays a huge role. (al, 2017) The life insurance industry being a cover for all the sufferings, they have a grievance cell to address all the Volume-V Issue-1 January-2019
citizens. Further, they enhance the government’s accumulation of productive capital, which is primarily invested in long term investment instruments that can be used for infrastructural development. As the dominant segment in the insurance market, the sustainability of the life insurance business is crucial for developing nations. They play active role as the country’s protection and repair system (Sambasivam & Ayele 2013). Literature have thus reported that five possible relationships could exist between insurance and economic growth: negative (Zouhaier, 2014), demand following (Ching, Kogid, & Furuoka, 2010), supply leading (Ward & Zurbruegg, 2000), interdependence (Ghosh, 2013) and no relationship at all (Haiss & Sumegi, 2008; Omoke, 2012). This theory thus provides us the foundation to find out how insurance has contributed to Nigeria’s economic growth since they are the second largest financial institution after banks in Nigeria.
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actuarial model of life insurance with payouts increased for fuzzy process is formulated in Section 4. Some actu- arial formula of pure premium of the n-year continuous life insurance model is discussed in Section 5, as dis- count factor is a fuzzy process. Finally, some remarks are made in the concluding section.
The overall analysis of the non-life insurance companies’ growth and progress of health insurance players, the analysis of current scenario of health insurance marketing in relation with certain demographic factors, awareness level of the general public, satisfaction level with regard to various services, factors affecting their purchase decisions, impact of various distribution and promotional channels, sector preference and future trends regarding health policies for the consumers, and the perception of the providers towards health insurance market have helped in reaching certain conclusions. On the basis of these conclusions some workable recommendations have also been made to the providers seeking opportunity to penetrate into the health insurance market.
With the comprehensive advancement of China’s economic reform, the scale of health insurance business and the field of service have been expanding, showing a rapid growth tendency. During the “12” fifth period, premium income in- creased by about 3 times, reaching 241 billion yuan in 2015. As the first year of “13, fifth period”, in 2016, in the first half of the year, business income is close to the year-round level, the first three quarters of the original insurance premiums of 343 billion yuan, up 87% over the same period of last year, ranking the first of all types of insurance business. On the type of product, the types and quantity of commercial health insurance is continuously rising. In 1992, all kinds of health How to cite this paper: Shen, S.C. and
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So with insurance premiums all set to increase, there is going to be a war between different insurance companies in the market, as people will now be more averse to invest. And it does not spell good news because the insurance industry has been gradually moving down despite all the predictions of boom. The Life Insurance Council has already written to the finance ministry, urging that GST be charged only on premium collected by the insurer, for their life insurance services, without involving in the investment portion, where the companies act solely in the fiduciary capacity.
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For economic development, investment are necessary, investments are made out of savings. Life Insurance Company is a major instrument for the mobilization of savings of people particularly from the middle and lower income groups. These savings are channeled into investment for economic growth. The insurance act has strict provisions to ensure that insurance funds are invested in safe avenues, like government bonds, companies with record of profit and so on. If we take another parameter, it shows that private life insurers expanded their business very fast as they had 57.17 per cent share in total number of offices operating in India as on 31.3.2013, while LIC expanded at slow speed due to its already established network throughout the country. Within the private life insurers, two insurers namely, Bajaj Allianz Life Insurance Company Limited and Reliance Life Insurance Company Limited grew very fast with a growth rate of more than 2462.2 per cent and six insurers grew at a growth rate of more than 100 per cent.
Personal data belonging to contracting party of the policy as well as to the insured party are provided in the insurance application. The contract stipulates several questions concerning the health condition of the insured persons, such as: whether he is exposed to serious risks in practicing his profession or apart from his work, whether he has suffered from a certain disease - Lung troubles, heart diseases, stomach complaints, pancreas, intestine, kidney or genital disorders, neuropsychical disorders, epilepsy, diabetes, arterial hypertension, tuberculosis, cancer or any other form of tumour, blood diseases, articular, osseous or skin diseases - or a surgical intervention, whether he was retired due to different health matters, if there were other life insurance petitions addressed to other insurance companies in the past and, moreover, if they were rejected or if there were penalties applied, questions regarding the medication frequency, drug and alcohol consumption, the existing of other life insurance policies.
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