Journals

Journal of Risk and Insurance

The Journal of Risk and Insurance (JRI) is the premier outlet for theoretical and empirical research on the topics of insurance economics and risk management. Research in the JRI informs practice, policy-making, and regulation in insurance markets as well as corporate and household risk management.

JRI is the flagship journal for ARIA and is currently indexed by the American Economic Association’s Economic Literature Index, RePEc, the Social Sciences Citation Index, and others. Issues of the JRI, from volume one to volume 82 (2015), are available online through JSTOR. Recent issues of the JRI are available through Wiley Online Library. A subscription to the Journal of Risk and Insurance is one of the many benefits of ARIA Membership.

The JRI has opened a call for papers for a special issue on climate change and natural disasters. The submission deadline is September 1, 2022. See the call for papers.

Journal of Risk and Insurance

Volume 88, Issue 2

Estimating the relation between digitalization and the market value of insurers

We analyze the relation between digitalization and the market value of US insurance companies. To create a text-based measure that captures the extent to which insurers digitalize, we apply an unsupervised machine learning algorithm—Latent Dirichlet Allocation—to their annual reports. We show that an increase in digitalization is associated with an increase in market valuations in the insurance sector. In detail, capital market participants seem to reward digitalization efforts of an insurer in the form of higher absolute market capitalizations and market-to-book ratios. Additionally, we provide evidence that the positive relation between digitalization and market valuations is robust to sentiment in the annual reports and the choice of the reference document on digitalization, both being issues of particular importance in text-based analyses.

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Journal of Risk and Insurance

Volume 88, Issue 2

The information content of the Solvency II ratio relative to earnings

We examine the information content of disclosures of solvency and earnings information of European insurance companies under the Solvency I and Solvency II regulatory regimes. Using an event-study research design, we investigate a sample of 571 announcements of 46 insurance firms during the 2012–2018 period. We find that under the Solvency I directive, investors find unexpected earnings to be informative but not the unexpected solvency ratio. However, under the Solvency II directive, both unexpected earnings and the unexpected solvency ratio are relevant to investors. Based on a decomposition of explained variance, we find that under the Solvency II directive, investors’ attention has partly shifted away from earnings information toward solvency information. Our results indicate that the disclosed solvency ratios contain value relevant information under the risk-based Solvency II framework and that the requirements under this framework shift investor attention toward solvency information and away from earnings of European insurance companies.

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Journal of Risk and Insurance

Volume 88, Issue 2

Did COVID-19 change life insurance offerings?

The profitability of life insurance offerings is contingent on accurate projections and pricing of mortality risk. The COVID-19 pandemic created significant uncertainty, with dire mortality predictions from early forecasts resulting in widespread government intervention and greater individual precaution that reduced the projected death toll. We analyze how life insurance companies changed pricing and offerings in response to COVID-19 using monthly data on term life insurance policies from Compulife. We estimate event-study models that exploit well-established variation in the COVID-19 mortality rate based on age and underlying health status. Despite the increase in mortality risk and significant uncertainty, the results generally indicate that life insurance companies did not increase premiums or decrease policy offerings due to COVID-19. Nonetheless, we find some evidence that premiums differentially increased for individuals with very high risk and that some policies were removed for the oldest of the old.

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Risk Management & Insurance Review

Risk Management and Insurance Review publishes high-quality applied research, well-reasoned opinion and discussion in the field of risk and insurance. Additionally, the Review provides a repository of high-caliber model lectures in risk and insurance, along with articles discussing and evaluating instructional techniques. A subscription to the Risk Management and Insurance Review is one of the many benefits of ARIA Membership.

Risk Management & Insurance Review

Volume 24, Issue 3

Current trends in the formation and development of insurance marketing in Ukraine

The relevance of the article due to the fact that the insurance industry of Ukraine at the present stage is developing in the global financial, economic and CORONA crisis, which deepens a number of unresolved problems: increases the risk of insurance companies, reduces demand for insurance products; distrust of insurance on the part of potential insurers has increased, increasing competition between insurers for the sphere of influence and customers. The purpose of the articles is to prepare theoretical foundations and develop practical recommendations for the introduction and improvement of the use of modern insurance management in the activities of Ukrainian insurers. The result of this studying is deepening and improvement of modern theory in insurance marketing, and development of practical recommendations for improving the efficiency and competitiveness of Ukrainian insurers.

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Risk Management & Insurance Review

Volume 24, Issue 3

Determinants of the market choice and the consumers behavior on the Macedonian MTPL insurance market: Empirical application of the Markov chain model

Markov chain models are widely used for capturing the switching behavior of economic agents and its impact on the prospective market developments in various industries. The aim of this paper is to analyze the customers’ altered behavior on the Motor Third Party Liability Insurance market in Republic of North Macedonia for the period of 2016–2018, in a setting where the policy tariff rates are equal for all the Insurance providers, that is, prices are excluded as a factor of transition. For that purpose, a stationary, homogeneous, first-order Markov Chain model is deployed to detect the flows and the reasoning behind the decisions for customers’ transition across companies. This approach is applied for the first time on the Macedonian Insurance Market and the findings offer valuable information to many interested parties including policymakers, insurance providers, as well as researchers in the field.

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Risk Management & Insurance Review

Volume 24, Issue 3

What drives life insurance purchasing decisions in Bosnia and Herzegovina?

Life insurance has become increasingly relevant in Bosnia and Herzegovina (BiH) over the last 10 years. The market is still underdeveloped with low life insurance density (EUR 23.2 per capita in 2019), however, it shows great potential with growth rates averaging 8.7%. The examination of the drivers of life insurance demand should instruct life insurers and policymakers to implement strategies to accelerate the life insurance development in BiH. Life insurance purchasing decisions are influenced by series of determinants, reflecting the customers’ experiences and preferences. The purpose of this paper is to examine the determinants of customer life insurance purchasing decisions. We consider the following factors: Income, insurance policy price, propensity to save, insurance policy yield, product-offer, corporate image, and brand. The research covers the existing and potential customers in BiH. Two hundred respondents participated in a survey who were selected according to different sociodemographic characteristics. The main findings show the relevance of particular determinants and their differences that can be helpful for insurance companies in creating their strategy for market growth.

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