Pandemics and the Individual Life Insurance Market: Evidence of the Impact of COVID-19

COVID-19 has led to significant loss of life and has adversely impacted the worldwide economy. While anecdotal evidence indicates a growing interest in life insurance among U.S. consumers during the pandemic, little is known about how the pandemic may have affected the life insurance market. We utilize insurer-state data to create a measure that captures an insurer's exposure to COVID in each state in which it conducts business. Using this measure to examine the impact of the pandemic on the market for individual life insurance, we find that greater insurer-state COVID exposure is associated with smaller changes in issuances and surrenders in the U.S. We also find that observations with the greatest COVID exposure are more likely to experience declines in issuance and surrender activity. These results indicate that insurers were deliberate with respect to their policy issuance decisions while policyholders kept their policies in force during a period of significant uncertainty. [Key words: COVID-19;life insurance;pandemics;policy issuances;policy surrenders.] JEL Classifications: D12, D22, G22

The Impact of a Public Health Emergency on the Demand for Life Insurance – An Empirical Analysis Based on Severe Acute Respiratory Syndrome

We examined changes in personal life insurance purchase decisions after a public health event by incorporating perceived health risk and regret into the expected utility function. The model predicts that the epidemic will create incremental insurance demand. Based on the 2003 severe acute respiratory syndrome outbreak in China, we used a panel dataset of 30 provinces from 2000 to 2007 and applied the difference-in-differences method to confirm the prediction empirically. The results showed that the epidemic did not significantly impact the demand for life insurance in the short term but played a role in the long term. People increased their health-care expenditure and premiums for new policies after the severe acute respiratory syndrome event, suggesting that the epidemic changed people's perceived risk and triggered anticipated regret, which increased life insurance demand. Some robustness checks also supported our findings. © 2023 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Customer's Perspective on Health Insurance Post-Pandemic

India is among the nations most severely impacted by COVID-19, which has affected practically all global industries and sectors, including the insurance sector. The covid pandemic has forced businesses in all industries to alter the way they conduct business, and the health insurance market is no exception. The prolonged lockdown following COVID-19 has forced insurance companies to extensively rely on their digital architecture for everything from selling new policies to customers to handling claims. Many insurance companies create specialised policies to guarantee coverage is not impacted. This essay attempts to explore the effects of COVID-19 on health insurance and how they affect the industry as a whole.

Determinants of Insurance Awareness and Perceived Value and Their Impact on Unit Linked Insurance Customer Retention with COVID-19 Pandemic as Moderator

The study aims to analyze pandemic life insurance companies faced matter of concerning to extension of customers of unit linked insurance policies during the COVID 19. Unit-linked life insurance product has become a major contributor to the company's profits. This study aims to investigate the factors that influence insurance awareness and perceived value and their impact on customer retention with the COVID 19 pandemic as a moderator. Design/methodology/approach. This study conducted an online survey and total of 230 completed questionnaires were collected from customers in Jakarta. The data was analyzed using SmartPLS software. Findings – Results indicate that insurance awareness, perceived value, and COVID 19 pandemic significantly influence customer retention. Insurance agents, psychological factors and financial literacy significantly influence insurance awareness. E-service quality significantly affects perceived value. The interaction between the COVID 19 pandemic and insurance awareness and the interaction between the COVID 19 pandemic and perceived value did not significantly affect customer retention. Originality/value – The study contributes to the marketing literature by proposing a conceptual model: the life insurance customer retention model. The findings offer practical guidance to life insurance companies to keep the customer loyalty. [ FROM AUTHOR] Copyright of Journal of Social Science (2720-9938) is the property of Ridwan Institute and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full . (Copyright applies to all s.)

Household risk strategies during a pandemic – experiences from the 1918 influenza pandemic

In 2020, The COVID-19 crisis has put great pressure on the economy worldwide. Only time can tell whether the COVID-19 crisis will have permanent effects on corporate and household behaviour and how it will affect society at large. This article examines historical experiences of how households managed the financial consequences of rising mortality during the 1918 influenza pandemic. We find that the previous pandemic led to an immediate and major increase in primarily small-sum industrial life insurance policies designed for blue-collar workers. The increase in new policies did not, however, have a lasting effect. By the time the pandemic had faded, the number of policies had dropped to below pre-pandemic conditions. This historical experience underlines the fact that there are limits to the extent to which even a major shock, such as a pandemic, can lead to behavioural change among households as currently being predicted in relation to COVID-19.

Determination of Risk Factors and Breeders Approach for TARSIM Cattle Life Insurance

This study was carried out to obtain the opinions of breeders on the use of "cattle life insurance", to identify the problems they experienced and to offer solutions that will enable the breeders to use "cattle life insurance" widely. "Agricultural insurance pool (AIP)", which was created within the scope of the "agricultural insurance law" with the decision dated as 14.06.2005 and numbered as 5363 to guarantee the risks threatening the agricultural sector in Turkey, is managed by the agricultural insurance pool management incorporated company (AIPMIC). Similarly, "cattle life insurance (CLI)" carries out its activities within scope of AIPMIC. In this study, an online survey was conducted with 173 breeders determined by Simple Random Sampling Method in 2021 under Covid-19 pandemic conditions. Questionnaires were sent to personal Whatsapp lines of breeders by Cattle Breeders' Associations. The data were evaluated with IBM SPSS Statistic 20.0 package program. The top five reasons not to use widely of CLI were determined as insufficient income of grower (19.3%), high policy price (15.6%), insufficient information about CLI (11.0%), insufficient amount of damage (10.7%), and insufficient insurance policy coverage (10.2%). As a result;in addition to its strategic importance, the agricultural sector, and therefore the livestock sector, is a sector that is highly affected by climate, economic, social, political, technological and personal risks, and is frequently faced with risks in its production due to its unique structure. However, in this sector, whose production is likely to face risks due to climate change and drought caused by global warming, in the insurance policy to ensure and encourage more breeders to benefit from the BHHS facility for the sustainability of cattle breeding;there is a need to reduce the insurance cost per unit animal to a reasonable level, to reduce the insurance policy cost and to make some other necessary arrangements.

Macroeconomic Challenges for Life Insurance Market in the Baltic States

The development of life insurance sector in the Baltic States is influenced by various opportunities and threats from the macroeconomic environment. In this context, the aim of this paper is to identify some macroeconomic factors that influence various indicators describing the life insurance market in Latvia, Estonia and Lithuania in the period 1993-2020 (direct premiums written, life insurance density, and life insurance penetration). The panel data approach suggests that economic growth, expenditure on tertiary education and income supports the development of the life insurance sector in these countries, while higher unemployment negatively affects the insurance market. These results have implications for the life insurance market forecasting in the new international context dominated by the Covid-19 pandemic. © 2022, University of National and World Economy. All rights reserved.

Risk Awareness for Vietnamese's Life Insurance on Financial Protection: The Case Study of Daklak Province, Vietnam

This paper aims to identify risk awareness through factors that influence the intention to buy people's life insurance in Daklak province of Vietnam and provide implications for life insurance companies. The data resources were conducted from the survey of 250 people in Daklak Province and applied the ordinal logit model for the analysis. Remarkably, as we conducted the study during the COVID-19 pandemic period, a dummy variable of COVID-19 was included in the analysis. The results of this research have some similarities and differences with other studies. As with the references, saving motivation was the most crucial factor affecting the dependent variable. Saving motivation, financial literacy, brand name, and risk awareness have a positive impact. While age and gender were differences that have a negative effect on the intention to buy life insurance, which means that young people and women have more intention to purchase life insurance than younger men. The four factors consisting of financial literacy, brand name, risk awareness, and gender were considered the second most important factors. COVID-19 and attitude were the third critical effect on the intention to purchase life insurance. Income was the less important factor.

An Examination of Life Insurer Share Price Behavior Surrounding Covid-19 Death Announcements

As of May 2022, the Covid-19 pandemic records over 1 million deaths in the United States. Pertinent to the reported number of deaths, it is questioned whether life insurance firms gained or lost from those incidences. This paper pursues an event study that examines life insurer share price behaviors by the announcements reporting the cumulative death numbers when they reach a certain threshold. We find that life insurers' share prices drop with every announcement. Specifically, our analysis finds evidence for the support of the damage hypothesis based on two competing eses in the literature: damage and revenue hypothesis. Our post-analysis also finds that the pandemic penalized overvalued firms and discouraged dividend cash spending.

Managing the risk of mortality shocks

Topics that have been published in this special issue include: direct effects on liabilities linked to mortality and longevity risks;capital market and insurance innovations for pandemic risk management;impacts on the provision of, and demand for, healthcare;and changes in investor/policyholder behaviour. When looking at the change in annuity and life insurance policy value, they find a drop of 9% of the annuity values in case of Polish male and an increase of 29% of the life insurance policy value for Italian males. G.P. Clemente, D. Della Corte and N. Savelli (A stochastic model for capital requirement assessment for mortality and longevity risk, focusing on idiosyncratic and trend components) argue that assessment of capital requirements must be based on actuarial models that are able to capture structural changes and extreme shocks so that insurance companies can cope with the unfavourable effects of new adverse demographic scenarios.

Changing Dimensions of Customers Behaviour for A Life Insurance Product Amid COVID-19 Pandemic

COVID-19 pandemic can be considered as an economic and health crisis of uncertain magnitude and duration. Frequent lockdowns, salary cuts, and losses of jobs and lives have spurred changes in human behaviour. Today customers are experiencing a transformation in their perceptions towards a life insurance product. The common attitude to treat life insurance as an optional investment instrument has been shifted towards a mandatory risk protection instrument. Thus the demand for a life insurance product is increasing by leaps and bounds and undoubtedly competition among insurance providers at the same time. This article seeks to examine the features that should form part of a life insurance product to attract customers in Indiaduring the COVID-19 pandemic. Data for the study were collected for 159 respondents from October 2020 to December 2020 from Delhi and NCR region. The data were analyzed using Principal Component Analysisafter walking through a maze of articles relating to normal times and crisis times. There is testable evidence to show a paradigm shift in the outlook of customers regarding a life insurance product. Thus, the article also paves the path for future research in the direction of customers behaviour for a life insurance product.

Not All Churn Customers Are the Same: Investigating the Effect of Customer Churn Heterogeneity on Customer Value in the Financial Sector

This research suggests a way to sustain a firm’s business by focusing on the economic aspects of relationship marketing by managing the heterogeneity of churn customers. In general, firms have regarded churn customers as a homogeneous segment, for they have not been conscious that churn ego can be various. However, customer churn can be divided into voluntary and involuntary, implying that firms should reform the retention strategy by focusing on egos that seem homogenous but are heterogeneous in terms of churn behavior. Using a multiple regression model, this study analyzed customer data from an insurance company to investigate the heterogeneous impacts of churn customers. It measured the impact based on the period and revenue in the second lifetime, comprehensively representing customer satisfaction. Empirical results show that customer churn heterogeneity significantly affects customers’ second-lifetime behavior. The analysis reveals how the firm effectively performed customer regaining initiatives and successfully maintained persistency. This research also concludes that voluntary and involuntary churn occurred by intrinsic and extrinsic motivation. Finally, this research implicates the retention strategy that differs from the heterogeneity to achieve a firm’s high performance and suggests an empirical method of spurious loyalty avoidance by hedging loyal customer selection risk.

LIFE INSURANCE PENETRATION DRIVERS IN BULGARIA

The need for security and protection of human life and health is the very cornerstone behind life insurance demand which has become larger with the current COVID-19 atmosphere. Life insurance penetration is significantly lower in Bulgaria compared to the EU average, while studies on the subject of how this development came about are almost absent. In that regard, this article is focused on the influence of major macroeconomic, demographic and competitive factors over life insurance penetration in Bulgaria. When it comes to the methodological aspect, the study is based on the theory of demand and industrial organisation by applying the descriptive and correlation analysis methods. The results underline that despite the positive trends in life gross premiums, written for the period of 2009-2020, Bulgarians prefer to allocate their excess funds towards alternative investment opportunities. To a large extent, this is attributed to the low amount of income and the low productivity of the economy as well as because of the lack of effective competition between the small number of insurance companies. From the customers’ point of view, this leads to a lack of awareness of the benefits of insurance, distrust and the absence of insurance interest, all of which are intensified during COVID-19. Responding to the market in relation to new business, supplying flexible, personalised and hybrid varieties of products, omni-channelling and development of positive attitudes among the population are all regarded as basic guidelines, used to improve insurance penetration. This article, therefore, serves as a foundation for a more in-depth study of the Bulgarian life insurance market, a stimulus for increasing the financial literacy of the Bulgarian populace and a subject of interest for insurance companies themselves in their fight to promote activity and to unleash market potential. © 2022, Bulgarska Akademiya na Naukite. All rights reserved.

The evolution from life insurance to financial engineering.

Since the mid-1980s, the share of household net worth intermediated by US financial institutions has shifted from defined benefit plans to life insurers and defined contribution plans. Life insurers have primarily grown through variable annuities, which are mutual funds with longevity insurance, a potential tax advantage, and minimum return guarantees. The minimum return guarantees change the primary function of life insurers from traditional insurance to financial engineering. Variable annuity insurers are exposed to interest and equity risk mismatch and their stock returns were especially low during the COVID-19 crisis. We consider regulatory changes, such as more detailed financial disclosure and standardized stress tests, to monitor potential risk mismatch and to ensure stability of the insurance sector.

What We Know about Research on Life Insurance Lapse: A Bibliometric Analysis

A lapsed policy is an insurance policy that has become inactive due to non-payment of premiums. The word “lapse” is an insurance topic that constantly evolves, proven by the recent increase in publications on this topic. The study explores the life insurance lapse decision through a comprehensive bibliometric analysis throughout the years, concentrating on publication trends;co-authorship networks among countries, authors, and scientific journals;and the field’s evolution. The research is based on the Scopus database. Ultimately, 178 documents were retrieved and analysed, demonstrating increased literature on insurance lapse from 1971 to 2021. The authors’ keyword co-occurrence network was also analysed for possible future directions of the field. Journals originating from the United Kingdom dominate the publication on life insurance lapsation. In contrast, an author from the United States is at the first rank in terms of the co-authorship network’s total link strength. The results may help researchers define the research objective and determine the aspects of the life insurance lapse for future research.

Special Issue “Quantitative Risk Assessment in Life, Health and Pension Insurance”

The high volatility in financial markets, together with the ultra-low interest rates environment and the increased expectation of life, constitute serious threats for providers of long-term investment guarantees and lifelong benefits. To this end, a stochastic model for traditional life insurance contracts is proposed and framed within the Solvency II Directive. The paper ends with the presentation of a case study of a portfolio of life insurance contracts, which testifies the effectiveness of the model in highlighting the main drivers of capital requirement evaluation.

Optimal Asset Allocation Subject to Withdrawal Risk and Solvency Constraints

This paper investigates the optimal asset allocation of a financial institution whose customers are free to withdraw their capital-guaranteed financial contracts at any time. In accounting for the asset-liability mismatch risk of the institution, we present a general utility optimization problem in a discrete-time setting and provide a dynamic programming principle for the optimal investment strategies. Furthermore, we consider an explicit context, including liquidity risk, interest rate, and credit intensity fluctuations, and show by numerical results that the optimal strategy improves both the solvency and asset returns of the institution compared to a standard institutional investor’s asset allocation.

How regulatory changes are driven by a need for control in reputational scandals: a case study in the German insurance industry

PurposeThis paper aims to contribute to the understanding of the mechanisms that evolve during reputational scandals and lead to changes in industry regulation. It explores the processes by which a demand for external industry regulation evolves, also addressing the consequences of firms’ competitive behaviors which lead to substantial misbehavior and the destruction of reputational capital. The authors are interested in whether and how regulatory activities – in the case analyzed here, changes in insurance regulation regarding sales commissions for insurance brokers – are used as a costly, external behavioral control mechanism (third-loop learning) to terminate a reputational scandal that cannot be stopped by internal controls at a firm level (first-loop and second-loop learning) anymore.Design/methodology/approachThe paper explores a real-life case in the German insurance industry that peaked in 2012 and has been well documented by broad media coverage, complemented by interviews with leading industry representatives. Using causal process tracing as a methodology, the authors study the factors in the case that led to an industry scandal. The authors further analyze why the insurance firms involved were not able to limit the scandal’s impact by internally controlling their behaviors, but had to call for external regulation, thus imposing costly restrictions on sales and contract processes. To identify the mechanisms underlying this result, theories from the fields of economics (game theory) and sociology (vicious cycle of bureaucracies), as well as organizational learning theory, are used.FindingsThe authors find that individual rationality does not suffice to prevent insurance firms from scandalous business practices, e.g. via implementing appropriate internal behavioral control measures within their organizations. If, as a result, misbehavior leads to reputational scandals, and the destruction of reputational capital spills over to the whole industry, a vicious cycle is set in motion which can be terminated by regulation as an externally enforced control mechanism.Research limitations/implicationsThis study is limited to the analysis of a single case study, combining published materials, e.g. broad media coverage, with interviews from representatives of the insurance industry. Nevertheless, the underlying mechanisms that have been identified can be used in other case studies as well.Practical implicationsThe paper shows that if firms want to avoid increasing regulation, they must implement strong reputational risk management (RRM) to counteract short-term profit pressure and to avoid restrictive regulation imposed on the industry as a whole. Furthermore, it sheds light on the relevance of spillover effects for RRM, as not only employee behavior within an organization might lead to the destruction of reputational capital but also that from other firms, e.g. from elsewhere within an industry.Originality/valueThe paper contributes by emphasizing a direct causal link between corporate scandals, loss of reputation and regulatory change within the insurance industry. Furthermore, the paper contributes by combining economic theories with organizational theories to understand real-life phenomena.

Changing Contours of Indian Insurance Sector

The insurance industry in India has been growing dynamically, with total insurance premiums increasing rapidly, as compared to global counterparts. The ongoing COVID-19 pandemic drastically shifted consumer needs, habits and expectations, while compelling virtual ization of operations. The deadly novel coronavirus triggered a galore of structural changes across all sectors and the insurance industry was no exception. Fortunately, during these tough times, the Indian insurance industry buckled down efficiently. The industry made the best use of technology to provide the greatest possible support to customers in buying the right protection products. The life insurance industry is expected to increase at a CAGR of 5.3% between 2019 and 2023. India's insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1%.