Life Insurance Companies: Determinants of Cost Efficiency and Profitability

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 step forward, but still inadequate: Australian health professionals’ views on the genetics and life insurance moratorium

BackgroundIn 2019, the Australian life insurance industry introduced a partial moratorium (ban) limiting the use of genetic test results in life insurance underwriting. The moratorium is industry self-regulated and applies only to policies below certain financial limits (eg, $500 000 of death cover).MethodsWe surveyed Australian health professionals (HPs) who discuss genetic testing with patients, to assess knowledge of the moratorium; reported patient experiences since its commencement; and HP views regarding regulation of genetic discrimination (GD) in Australia.ResultsBetween April and June 2020, 166 eligible HPs responded to the online survey. Of these, 86% were aware of the moratorium, but <50% had attended related training/information sessions. Only 16% answered all knowledge questions correctly, yet 69% believed they had sufficient knowledge to advise patients. Genetics HPs’ awareness and knowledge were better than non-genetics HPs’ (p<0.05). There was some reported decrease in patients delaying/declining testing after the moratorium’s introduction, however, 42% of HPs disagreed that patients were more willing to have testing post-moratorium. Although many (76%) felt the moratorium resolved some GD concerns, most (88%) still have concerns, primarily around self-regulation, financial limits and the moratorium’s temporary nature. Almost half (49%) of HPs reported being dissatisfied with the moratorium as a solution to GD. The majority (95%) felt government oversight is required, and 93% felt specific Australian legislation regarding GD is required.ConclusionWhile the current Australian moratorium is considered a step forward, most HPs believe it falls short of an adequate long-term regulatory solution to GD in life insurance.

Measuring Total Factor Productivity of China Provincial Non-Life Insurance Market: A DEA-Malmquist Index Method

The unbalanced economic development results in the difference in operating efficiency of the non-life insurance industry in China’s provinces; based on the DEA-Malmquist index method, this paper investigates the provincial differences, dynamic change characteristics, and causes of non-life insurance productivity in 31 provinces of China from 2004 to 2017. The results show that in the sample period, there are significant differences between provinces and regions in China’s non-life insurance efficiency, which generally shows the echelon spatial characteristics of “strong in the west and weak in the east”. Technological progress in the western region promotes the rapid growth of total factor productivity, while the low efficiency of technological progress in the eastern region restrains the improvement of total factor productivity. The overall total factor productivity of China’s provincial non-life insurance industry is on the rise, mainly due to the improvement of pure technical efficiency and scale efficiency, while technological progress has an inhibiting effect on the contrary. These conclusions are of reference value for relevant stakeholders in China’s provincial non-life insurance market to formulate development strategies and business strategies.

IndiaFirst Life Insurance: Planning Next-Level Growth by Corporate Entrepreneurship

IndiaFirst Life Insurance (IFLI) became the 23rd entrant in India’s life insurance industry by launching its operations in November 2009 (IndiaFirst Life Insurance, 2015). IFLI went on to break-even within 6 years of its inception by declaring maiden profits in FY 2015–2016 (IndiaFirst Life Insurance, 2015). The company stated its vision as—‘To become a Life Insurance and Pension business leader that provides significant value to all its stakeholders enabling a true customer delight’ (IndiaFirst Life Insurance, 2015). In order to implement its vision, IFLI worked its human resource policies and processes around the ‘Employees First’ approach (IndiaFirst Life Insurance, 2015). These processes had helped IFLI to become the fastest-growing company in the life insurance sector, and it was ranked 12th amongst the private insurers in terms of market ranking in individual annual premium equivalent for FY 2016–2017 ( Times of India, 2017). The company aimed to become a top 10 life insurance provider in the next few years in India in terms of retail premium business ( Times of India, 2017).

Market Structure and Profitability: Evidence in the Indonesian Islamic Insurance Industry

There is limited research about the relationship between market structure and profitability in the insurance industry, especially in the Islamic insurance industry. This study examines the relationship among market structure and profitability in Islamic life insurance industry in Indonesia. This research used regression with panel data for the technique of analysis. The model used in this research was the fixed effect model. The result shows that the market structure affected the profitability of Islamic life insurance industry. This result implies that the traditional hypothesis supports the performance of Islamic life insurance industry in Indonesia. However, this research shows that there is no collusive behavior in Islamic life insurance industry in Indonesia. Meanwhile, for control variables, operational efficiency has an adverse effect on the performance of Islamic life insurance industry in Indonesia.

The Effect of Branch Office Locations on Technical Efficiency: Evidence from the Indian Life Insurance Industry

The purpose of this article is to investigate the efficiency and productivity growth of Indian life insurance industry and to assess the effect of branch office locations on efficiency. This study has analysed the efficiency and productivity performance of all the 24 life insurance companies during the period from 2016 to 2019, using slack-based measures (SBM) of data envelopment analysis. SBM super-efficiency model is used to rank the fully efficient life insurers. Malmquist index is used to assess the productivity of life insurance companies. To assess the effect of branch office geographical locations on efficiency, double bootstrap regression has been used. The findings indicate that Indian life insurance industry experienced significant fluctuations in mean technical efficiency during the study period. Almost 50% of life insurers operated efficiently in one or more years during the study period. Only 3 out of 24 life insurers were found scale efficient. Interestingly, 50% of life insurers experienced growth during our study period. Double bootstrap regression analysis indicates that semi-urban and rural branch offices have positive effect on the efficiency of the life insurers. This study is first of its kind that has assessed the effect of branch office locations on the efficiency of life insurers. The study brings to light the operating characteristics, efficiencies and productivity of the Indian life insurance companies for the period from 2016 to 2019.

Mindset shifts for the Fourth Industrial Revolution: Insights from the life insurance sector

Orientation: The Fourth Industrial Revolution (4IR) challenges organisations to embrace and adapt to a rising wave of technological innovation to remain relevant.Research purpose: Based on the interaction between technology change, the industry as a whole and the perceptions of individuals within organisations, this study explored how South African life insurance companies view the 4IR and how they are responding to the changes prompted by it.Motivation for study: This study sought to establish a baseline for practitioners in the life insurance industry to navigate the 4IR more effectively and for researchers to undertake further inquiry into specific enablers and inhibitors of technology transformation.Research approach/design and method: The study took an exploratory, qualitative approach. Interviews were conducted with 12 organisational leaders, purposively selected from a range of large, medium and start-up life insurers in South Africa. A thematic analysis method was used to analyse the data.Main findings: Four key themes related to organisational change and resistance to change within the industry were found: lack of urgency; lack of agility; partnerships and ecosystems; and abilities of people and leaders.Practical/managerial implications: Managers should recognise the urgency for proactive change, encourage collaborative practices by leveraging ecosystems and forming partnerships and ensure lifelong learning of employees.Contribution/value-add: There is a paucity of empirical work on managerial perceptions of the 4IR and the readiness for change within the life insurance industry. This study contributes to this debate and provided insights on organisational views at a management level.