Risk Management and Capital Allocation for Non-Life Insurance Companies

2014 ◽  
pp. 253-264
Author(s):  
Marco Pirra ◽  
Salvatore Forte ◽  
Matteo Ialenti
Keyword(s):  
Risk Management ◽  
Life Insurance ◽  
Capital Allocation ◽  
Insurance Companies

scholarly journals The Implementation of ERM in Non-Life Insurance Companies in Albania

2020 ◽  
Vol 5 (6) ◽  
Author(s):  
Armanda Tola
Keyword(s):  
Risk Management ◽  
Field Study ◽  
Life Insurance ◽  
Firm Value ◽  
Management Practices ◽  
Capital Allocation ◽  
Insurance Companies ◽  
Structured Interviews ◽  
Adoption And Implementation ◽  
The Impact

Enterprise risk management (ERM) has emerged a significant change starting from the way firms manage their complex portfolio of risks. Particularly, the insurance companies that use ERM have shown propensity of success during their daily operation and have been capable to diminish the collective risk of their output. This study draws attention to the performance, firm value and capital allocation effects of ERM adoption in emerging economies using the case of non- life insurance companies in Albania. The objective of the paper is to examine the effects trigged by ERM implementation on their firm value and the factors that caused it based on a structural and institutional theoretical framework. The sample is the population itself including all the non-life insurance companies which have implemented ERM from 2015 and on. The methodology includes explanatory field study through semi-structured interviews with the key actors of risk management departments of these companies. This study distinguishes the impact of institutional and managerial pressures in adapting ERM in non-life insurance companies, based on empirical evidence and field study. The aim is to contribute in a better understanding of all the forces driving ERM adoption and implementation and the change in risk management practices and capital allocation within non-life insurance companies in Albania. The findings identify the nature of internal and external factors which can be useful in creating new policies in relation of improving risk management systems and corporate governance.

scholarly journals Mechanisms of Protection from Interest Rate Risk with Reference to the Life Insurance Market in Montenegro

2018 ◽  
Vol 7 (1) ◽  
pp. 17-42
Author(s):  
Milijana Novović Burić ◽  
Vladimir Kašćelan ◽  
Milivoje Radović ◽  
Ana Lalević Filipović
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Life Insurance ◽  
Financial Management ◽  
Financial Stability ◽  
Interest Rate Risk ◽  
Economic Security ◽  
Insurance Market ◽  
Insurance Companies ◽  
Rate Risk

Abstract Insurance companies are facing major challenges that point to the need for control process and risk management. Risk management in insurance has a direct impact on solvency, economic security, and overall financial stability of insurance companies. It is very important for insurance companies to adequately calculate risks to which they are exposed. Asset liability management (ALM), as an integrated approach to financial management, requires simultaneous decision-making about categories and values of assets and liabilities in order to establish the optimum volume and the ratio of assets and liabilities, with the understanding of complexity of the financial market in which financial institutions operate. ALM focuses on a significant number of risks, whereby the emphasis in this paper will be on interest rate risk which indicates potential losses that may reflect in a lower interest margin, a lower value of assets or both, in terms of changes in interest rates. In the above context, the aim of this paper is to show how to protect from interest rate changes and how these changes influence the insurance market in Montenegro, both from the theoretical and the practical point of view. The authors consider this to be an interesting and very important topic, especially because the life insurance market in Montenegro is underdeveloped and subject to fluctuations. Also, taking into account the fact that Montenegro is a country that has been making serious efforts to join the EU, it is expected that insurance companies in Montenegro will strengthen their financial position in the market even using the ALM traditional techniques, which is shown in this paper.

Quantifying Operational Risk in Life Insurance Companies. Developed by the Life Operational Risk Working Party

2007 ◽  
Vol 13 (2) ◽  
pp. 257-337 ◽  
Author(s):  
N. C. Dexter ◽  
C. L. Ford ◽  
P. C. Jakhria ◽  
P. O. J. Kelliher ◽  
D. McCall ◽  
...  
Keyword(s):  
Risk Management ◽  
Life Insurance ◽  
Best Practice ◽  
Early Stage ◽  
Working Party ◽  
Operational Risk ◽  
Capital Requirements ◽  
Senior Management ◽  
Insurance Companies ◽  
Stage Of Development

ABSTRACTThis paper overviews a practical approach to the assessment of operational risk in life insurance companies. It considers how actuaries, working in conjunction with risk management professionals and senior management, can develop a framework to assess the capital requirements relating to operational risk, taking into account the capital requirements of other risks and their interaction.This paper recognises that we do not live in an ideal world, and that a lot of the data which one might want for operational risk assessment are not, and in some cases never will be, available. Consequently, the approach outlined in this paper takes into account the fact that management and assessment of operational risk is at an early stage of development in the life industry. In addition, it outlines some of the areas where development is necessary or desirable in the coming years.There is a section on the operational risks against which it is appropriate to hold capital. As this is a new area for insurance companies, and given the governance requirements for Individual Capital Assessments, it is important to explain the results effectively to senior management. Therefore, a brief review of techniques for reporting the results of the assessment is provided.The paper concludes with some thoughts on how operational risk management can be embedded more in the business, and then considers what future work will help develop the framework. To echo the thoughts of the authors of the general insurance paper on this topic (Tripp et al., 2004), we hope that the paper will sow seeds for the development of best practice in dealing with operational risk, and will raise the awareness and increase the interest of actuaries in this emerging topic.This paper represents the views of the individuals in the working party, and not necessarily the views of their employers or the Actuarial Profession.

scholarly journals Life Insurance Companies: Determinants of Cost Efficiency and Profitability

2021 ◽  
Vol 28 (2) ◽  
pp. 1
Author(s):  
Joseph Kwadwo Tuffour ◽  
Kenneth Ofori-Boateng ◽  
Williams Ohemeng ◽  
Jane Kabukuor Akuaku
Keyword(s):  
Life Insurance ◽  
Cost Efficiency ◽  
Insurance Industry ◽  
Capital Allocation ◽  
Insurance Companies ◽  
Policy Makers ◽  
Earnings Information ◽  
Life Insurance Industry ◽  
Effective Cost ◽  
Cost Efficient

One of the most important aspects of measuring a firm’s performance is its efficiency, through which the firm is expected to envisage effective cost reductions, thereby enhancing profitability. However, most studies conducted to explore the determinants of insurance companies’ performance has concentrated on the accounts earnings information and its components which are known to explain a small proportion of a firm’s performance. Also, studies on insurance either lump all the insurance companies together or pay more attention to non-life insurance, making it difficult to evaluate the fast growing life insurance industry in Ghana. Therefore, this study examines the efficiency of life insurance companies in Ghana utilising data from twelve life insurance companies for a period of 2013-2017. The efficiency scores were calculated using Efficiency Measurement System software. The fixed effect panel regression results show that, the significant determinants of both cost and profit functions are: price of labour, commission, gross premium and net investment income. It was also revealed that, on the average, the life insurance companies were about 71.2% cost efficient and 41.7% profit efficient. Further analysis reveals that, both profit and cost efficiency changes have statistically significant positive effect on firms’ Return on Asset. Policy-makers should institute policies that encourage these companies to operate efficiently in order to make effective capital allocation decisions to avoid collapse.

A Study of Disclosures on Risk Management of Life Insurance Companies in India

2017 ◽  
Vol 11 (1) ◽  
pp. 29
Author(s):  
B. R. Hariharan ◽  
Vedala Naga Sailaja ◽  
Kalp Vinodchandra Patel
Keyword(s):  
Risk Management ◽  
Life Insurance ◽  
Insurance Companies

scholarly journals Internal model for insurers: possibilities and issues

2019 ◽  
Author(s):  
Ilze Zariņa ◽  
Irina Voronova ◽  
Gaida Pettere
Keyword(s):  
Risk Management ◽  
Literature Review ◽  
Life Insurance ◽  
Internal Model ◽  
Solvency Ii ◽  
Insurance Companies ◽  
Management Tool ◽  
Standard Formula ◽  
Risk Aggregation ◽  
The Baltic

Purpose – solvency II framework regulates how much capital the European Union insurance companies must hold. The amount of necessary capital can be calculated using a standard formula or an internal model. On the basis of the review of other authors’ empirical research, the present paper aim at identifying factors that influence necessary capital and propos-ing necessary areas of improvement for the methodology of an internal capital model. Research methodology – to conduct the paper, the authors have used the extended literature review. Analytical methods and comparative methods have been used for the Baltic non-life insurance market analysis. Findings – the Baltic market does not use an internal model even for a major risk – premium and reserve risks. A review of the current literature findings shows that the main weakness of the standard formula is risk aggregation. Research limitations – identified factors apply to non-life insurance companies under the Solvency II framework with a focus on reserve risk. Practical implications – factors are identified that should be implemented in the internal model methodology. The paper will help avoid using internal models as only a modern risk management tool and improve risk profile accuracy. Originality/Value – improvements of the internal model methodology are proposed based on a literature review. The au-thors have identified the main directions, issues and improvement possibilities for reaching modern risk management.

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