On the macrofinancial determinants of life and non-life insurance premiums

Abstract

This paper tests potential determinants of the development of the insurance sector. Using a rich dataset for 24 European countries spanning two decades, we identify a set of macrofinancial factors that are the most robust predictors of growth of gross premiums in the life and non-life insurance sectors. We show that both life and nonlife premiums co-move with the business cycle and are positively related to higher savings and a more developed financial system. In addition, we provide new evidence on the role of market concentration and price effects. We find that market concentration matters only for life insurance, whereas the price channel is significant only for non-life insurance. From a policy perspective, our empirical estimates can be used to refine the existing macroprudential stress tests of the insurance sector.

Non-life insurance: The state of the art of determining the superior method for pricing automobile insurance premiums using archival technique

“…Personalised approaches can lead to more tailored and fair pricing structures. Moreover, according to Hodula et al (2021), insurance premiums, whether for life insurance or health insurance, allow individuals to obtain and maintain coverage by paying a monthly or annual amount. Understanding the factors that influence group employee benefits and general insurance pricing, such as upselling/cross-selling potential, taxes, and investment income, is crucial in determining pricing strategies (Parodi, 2023).…”

Financial Stability of the Czech Insurance Companies

“…The financial stability of life and non-life business are analysed separately because they differ from each other, mostly in terms of individual indices, especially in costs and technical reserves. As Hodula et al (2021) mentioned, it is better to analyse both life and non-life insurance rather than focusing on only one of them, given that insurance companies operate in the whole insurance market. While the analysis is performed separately for life and non-life, the model specifications are similar.…”

Macroeconomic Determinants of Insurance Companies’ Financial Stability: The Case of the Czech Republic

“…The systemic risk contribution of the insurance sector has risen since the crisis. However, studies providing the analysis of the main drivers of the insurance sector are scarce, at least when compared to the banking sector (Hodula et al 2021). In addition, the financial system has become more complex (Trichet, 2005), therefore the importance of the analysis financial stability also in the insurance sector increased.…”

“…As Hodula et al (2021) stated that a healthy and stable insurance sector is crucial for the functioning of the economy, because it contributes to the economic growth and financial stability of the financial system as a whole. In addition, insurance companies protect households and companies from losses arising from natural disasters.…”