Journal of Insurance and Finance 2021 KCI Impact Factor : 0.67

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2005, Vol.16, No.2

  • 1.

    An Evaluation of the Korean Life Insurance Service Based on the Behavioral Responses of the Insured

    Oh Kiseok | 2005, 16(2) | pp.3~24 | number of Cited : 9
    Abstract PDF
    The insurance service consists of the ex ante indemnity service, ex post indemnity service and the other services from an insurer. In Korea, the indemnity services are officially evaluated, but the evaluation of the other insurance services is not sufficient. This paper attempted to evaluate the other services of the Korean life insurers based upon the behavioral responses of the insured, especially persistency and surrender. According to the evaluation using persistency rate calculated based upon the insured amount, there is no difference between large companies and small companies, and foreign-capital-companies are better than domestic-capital-companies. On the other hand, the evaluation using surrender ratio calculated based upon the number of insurance contracts shows that small companies are better than large companies, and there is no difference between domestic-capital-companies and foreign-capital-companies. Besides, the evaluation using surrender ratio considering the diminished contracts due to the other reason, for example expiration, large companies are better than small companies, and domestic-capital-companies are better than foreign-capital-companies. These results imply that small companies and foreign capital companies are overestimated and large companies and domestic capital companies are underestimated by the current persistency rate and surrender ratio calculated based upon the insured amount.
  • 2.

    Estimating the Present Value and the Break-Even Participating Rate for Equity-Linked Annuity Contracts

    Hongmin Zi | 2005, 16(2) | pp.25~48 | number of Cited : 0
    Abstract PDF
    This study analyzes equity-linked annuity contracts in terms of cliquet and compound options. We estimate the current values and the break-even participating rates of those contracts as well as the values of life-of-contract guarantee. To the cases in which there exist no closed form solutions, we employ the Monte Carlo simulation with the antithetic variable technique. The results show that the current values of those contracts increase as either volatility or participating rate increases and the risk-free interest rate decreases. With the use of variable values obtained from the current Korean economic conditions the break-even participating rate ranges between 30% to 60%. We also find that the value of life-of-contract guarantee is not negligible and increases significantly as the participating rate increases.
  • 3.

    A Study on the Risk Distribution of Natural Hazards and the Role of Government

    Shin Dong Ho | 2005, 16(2) | pp.49~76 | number of Cited : 5
    Abstract PDF
    This study analyzed the data for the special policy endorsement of the storm & flood perils in the fire insurance and houseowner’s comprehensive insurance from 1993 to 2002 for the first time in Korea. This study also analyzed the trials and errors of agricultural product insurance by national agricultural cooperative federation and the governmental role in them. Based on these analyses, the proposals were made about the governmental role by focusing on the law of storm & flood insurance managed by the national emergency management agency 1. In order to deal with the anti-selection risk in voluntary insurance, the rejection of a proposal in the flood damage habitual area can be taken into consideration. 2. While the tentatively named "National Emergency Management Corporation" manages the flood insurance program, the principle of non-life insurance, such as the principle of indemnity and the principle of insurance equation, should applied. 3. It is recommended that the premium aid of the government should be limited to farmers and fishermen. 4. To initiate flood insurance, it is required that the government should play an ultimate role as a reinsurer be quaranteeing limitless provision for the damage beyond a fixed scale together with excess loss ratio reinsurance or excess amount-of-damage reinsurance. 5. The storm-and-flood map should be made to fit for the use of the insurer's underwriting.
  • 4.

    An Experimental Analysis Approach on Soft Insurance Fraud Behavior

    Kim Hunsoo | 2005, 16(2) | pp.77~118 | number of Cited : 19
    Abstract PDF
    Employing TPB (the theory of planed behavior) model, this paper examines soft insurance fraud, which is the dominant part of insurance fraud but known to be difficult to contain. The papers investigates three types of soft fraud behavior; insurance premium fraud, hospitalization fraud and automobile building-up charge fraud. The TPB model successfully explains the insurance premium fraud behavior and automobile building-up charge fraud but fails to explain the hospitalization fraud behavior. This research also examines the effect of an education & promotion treatment, showing a popular TV program to experiment participants. The result of the experiment shows that the treatment has a significant effect on controlling the premium fraud behavior but no significant effect on the other two fraud behaviors.
  • 5.

    Examining Appropriateness of the Regulatory Restrictions on the Banking Ownership of an Insurer Held by Industrial Firm

    Keun Ock Lew | 2005, 16(2) | pp.119~152 | number of Cited : 5
    Abstract PDF
    The paper investigates difference in regulations of various countries on the mixing of industrial firms and banking to evaluate appropriateness of the Korean government's restrictions on banking ownership of domestic insurers held by non-financial firms. This study also examines empirically if the regulatory restrictions on the mixing affects positively the development of financial system of a country. The empirical test is done by regression analysis using financial data for 53 countries surveyed by the World Bank. The investigation results hardly accept our traditional belief that the mixing should not be allowed for the sound development of financial industry and the efficiency of resource allocation. The restrictive regulation is simply adopted by some countries such as the United States while other nations including many European countries do not put any limitation on the mixing. This paper also finds that such regulatory restriction do not make any contribution to the development of banking system and financial efficiency. Therefore the government's regulation seems redundant.