Yu-Luen Ma

Determinants of International Insurers' Participation in Foreign Non-Life Markets

Mirroring the trend in the broader marketplace, the global insurance industry is steadily moving toward increased liberalization and deregulation. This study seeks to develop the first empirical model that examines the importance of foreign market characteristics as they relate to the participation of international insurers in the non-life business of those countries. The analysis reveals that market structure is an important factor in determining whether international insurers participate in a given foreign market. In addition, for markets that are not competitive, removing trade barriers would significantly improve the desirability of those countries as host markets. The results also suggest that countries with higher gross domestic product tend to attract more involvement from international insurers. While this research focuses on the markets of industrialized countries, the findings will provide significant implications for those emerging markets that have not yet collected relevant data on a number of the variables included in this study. Copyright 2003 The Journal of Risk and Insurance.

The Market Structure Performance Relationship in the International Insurance Sector

This article tests the applicability of the structure-conduct-performance (SCP) hypothesis in the international nonlife insurance marketplace. We employ a panel data regression methodology that includes 23 nations (developed and developing countries) over the time period of 1996 to 2003. The results reveal that the interaction of market liberalization and market concentration shares a complex relationship with market profitability. Our results show that the expectations associated with the SCP hypothesis are supported when the levels of liberalization are low. However, for markets that are highly liberalized the presence of foreign insurers significantly alters the dynamics of nonlife insurance markets. Copyright (c) The Journal of Risk and Insurance, 2008.

FACTORS AFFECTING THE RELATIVE INCIDENCE OF UNINSURED MOTORISTS CLAIMS

Estimates of uninsured drivers in the United States hover around 15 percent (NAII, 1998). With extensive concern about insurance affordability and its effect on economic advancement (Joint Economic Committee, 1998) and with expansion of U.S. compensation systems to other nations, consideration of factors that affect the extent to which drivers choose to insure or not is valuable. This article addresses the effect of enforcement mechanisms for purchase of required insurance on the degree to which drivers choose not to insure. Results indicate that higher levels of enforcement stringency relate to lower levels of uninsured drivers. Lower levels of poverty and populations living in metropolitan areas are also related to lower levels of uninsured drivers, while no-fault states are associated with higher levels of uninsured motorists.

Do Publicly Traded Property–Casualty Insurers Cater to the Stock Market?

This article examines the catering theory in the insurance industry. We investigate whether managers of publicly traded insurers pursue a growth strategy catering to the stock markets preference. Two hypotheses are tested in this study: (1) an insurer will devote more efforts to increasing premium growth when the stock market places greater values on growth, and (2) this catering effect will be more pronounced at firms where managers have greater incentives to maximize short‐term stock prices. We find evidence supporting both hypotheses. Our study discovers a new channel through which the stock market and executive compensation affect insurance companies’ business strategies and the insurance market. The implication of the interplay between insurers and the stock market is significant and deserves future research.

Contingent Commissions, Insurance Intermediaries, and Insurer Performance

This research investigates the relationship shared by contingent commission usage and insurer performance. We assess performance using both frontier efficiency and financial performance measures. Our findings reveal that the relationship is complex and varies across differing insurer business models. We find that nonusers of contingent commissions are more cost and revenue efficient than are users of contingents. However, among insurers that use contingents, relatively higher levels of use are associated with more efficient operations and also better financial performance. Additionally, these findings are conditioned on the type of distribution system the insurer employs.

Studying Driving Risk Factors using Multi-Source Mobile Computing Data

ABSTRACT Traffic congestion can largely be attributed to the issues related with driving behavior, which may cause vehicle crash, stop-and-go traffic due to frequent lane changing behaviors, etc., and makes the driving behavior research also of significance in the realm of traffic management and demand management. The emergence and subsequent rapid advances with new information and communication technologies (ICT) now offers the capability of collecting high-fidelity and highresolution trajectory data in a cost-effective manner. In this research, we use a smartphone app to collect data for the purpose of studying driving risk factors. What’s unique about the data in this research is its backend server also estimates traffic speed and volume for each link that the vehicle traverses. In order words, the data collected with build-in GPS modules in the smartphone include not only the vehicle spatial-temporal dimension location, which could be used to correlate the network geography attributes and/or real-time traffic condition, but also the detailed information about the vehicle dynamics including speed, acceleration, and deceleration, whereby a driver’s control and maneuver of a vehicle can be analyzed in detail. Such type of dataset combining both user trajectory and link speed/volume information is rarely seen in prior research, permitting a unique opportunity to link critical traffic congestion factors leading to driving behavior and crash potential. In this paper, the overall research framework used in this research is presented, which mainly includes data collection, data processing, calibration and analysis methodology. A preliminary case study — including data summary statistics and correlation analysis — is also presented. The results of our study will further existing knowledge about driving exposure factors that are closely linked to crash risk, and provide the foundation for advanced forms of Usage Based Insurance.

Foreign Ownership and Non‐Life Insurer Efficiency in the Japanese Marketplace

Traditional shareholding patterns in Japan have experienced significant change beginning in the early 1990s. Since that time, foreign institutional shareholding has increased significantly largely at the expense of domestic financial institution ownership. This article examines whether these changes in ownership patterns share a relationship with insurer performance in the non‐life insurance market. Using data from 1992 to 2005, we assess performance in terms of efficiency measures using data envelopment analyses (DEA) techniques. Our results show that higher levels of domestic financial institution ownership in Japan are associated with insurer inefficiency. Relative to that relationship, the foreign ownership–insurer efficiency relationship is found to be positive. Additionally, we find that the disparity between those relationships has become more acute since 2001 when the Japanese non‐life insurance market experienced significant consolidation.

A Cross-National Study of Government Social Insurance as an Alternative to Tort Liability Compensation

Litigation rates in the United States have long been considered out of proportion with the remainder of the world, leading to a good deal of economic research trying to understand the causes. Much of that literature has focused on lawyer compensation rules and availability of general damage awards. Another possible reason for differences in national litigation rates is the relative generosity of government social programs. Using a sample of 24 countries over a 12-year period, we test the relationship between the size of government social program payments and liability costs as measured by liability insurance premiums, and find a strong negative relationship, controlling for income, accident rates, and a variety of other factors.

Grade-Risk: An Insurable Event in the Classroom

Grade-risk provides a powerful ally in establishing relevance between course content and the lives of students. As used in this article, grade-risk refers to the potential for the loss of points on examinations, quizzes, etc. This article describes the rationale and feasibility associated with the introduction of a student-centered grade insurance project that provides some measure of protection against grade-risk. The project engages students on multiple levels and in various capacities resulting in a significantly enriched learning experience. The authors include examples employed in their own classroom in demonstrating the feasibility and validity of grade insurance as a learning tool.

Insurance business synergies, economic growth and strategic planning

Previous research has found that life and non-life insurance business share significant relationships with economic growth. This current study extends that literature by being the first to investigate the synergistic relationship life and non-life insurance activities share with economic growth. We collect data that includes 84 national markets representing a broad spectrum of economic development over the 1994-2012 period and employ system-generalised method of moment (GMM) estimation technique based on a dynamic model structure. Our results support the hypothesis that life and non-life insurance synergies share a positive relationship with economic growth and that positive relationship experiences diminishing marginal returns as the insurance markets mature. The results of our study provide implications for policymakers with regard to market liberalisation strategies, as well as implications for the management of insurance companies contemplating foreign market expansion strategies.