Journal of Insurance and Finance 2021 KCI Impact Factor : 0.67

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2016, Vol.27, No.3

  • 1.

    Re - finding of Pension Replacement Rates Using Old - age CPI(Consumer Price Index) in View of Maintaining the Money Purchase Power

    박준범 , Sung Jooho | 2016, 27(3) | pp.3~43 | number of Cited : 4
    Abstract PDF
    As post-retirement years are getting longer, it became a serious issue to secure real purchasing power of retirees responding to the inflation risk. Many countries have dealt with the erosion of purchasing power by granting public pension linking CPI every year. In South Korea, it is instituted by law that the pension payments should be adjusted every year linking CPI for national pension, basic pension, etc. However, currently, CPI is calculated to cover the whole population, so it can be different from the CPI the elderly actual experience and consequently not guaranteeing the real purchasing power of them. On that account, this article calculated the CPI that domestic elderly consumers' actual experience. The findings are that the Old-age CPI is 1.13 times higher than that for whole population. Especially, the Old-age CPI for low income earners is estimated to be 1.20 times higher. Moreover, applying the discrepancy to pension replacement rates of national pension, the rates for old men and women are underestimated by 4.8% and 5.5%, respectively in view of real purchasing power. Also, in basic pension, the real purchasing power of low income elderly is underestimated by 7.0% for men and 8.0% for women. Therefore, when setting the public pension payments, it would be more realistic to use newly produced CPI, which is based on age and income level to secure real purchasing power, by considering the pensioners of national pension are the elderly and those of basic pension are the elderly with low income. In South Korea, private pensions partly provide some payment designs adjusting the amount of payments in non-qualified personal annuities. Yet, for qualified personal annuities or pension plans, the payment designs are still rigid and need to be varied to meet the various life style and needs of retirees as well as to respond to the price fluctuations in view of real purchasing power.
  • 2.

    A Study on the Prohibitive Provisions of Seize or Assignment in Act on Guarantee of Compensation for Loss Caused by Automobile

    Seongwan Kim | 2016, 27(3) | pp.45~80 | number of Cited : 1
    Abstract PDF
    To protect victims of automobile accident, there are several rights of claim in Act on Guarantee of Compensation for Loss Caused by Automobile. First of all, the direct right of action in liability insurance was established by Commercial Law(Article 724) and Act on Guarantee of Compensation for Loss Caused by Automobile(Article 10). Second, the temporary payments right of action was established by Act on Guarantee of Compensation for Loss Caused by Automobile(Article 11). Finally, government compensation right of action to make compensation for victims from car accident by hit-and-run or uninsured driver was established under the Article 30 in the Act on Guarantee of Compensation for Loss Caused by Automobile. Furthermore, the Act on Guarantee of Compensation for Loss Caused by Automobile guarantees the claims of the victims in the institutional regulations cannot be seized or assigned with respect to the above three rights. However, there are several disputes related with prohibitive provisions of seize or assignment; for example, it needs to be applied to limited liability insurance, be included the insurance payments to victims and be applied the assignment of the deed of the insurer guarantee to pay directly to the medical institutions for the proper care of the victims. Therefore, this article looked through the direct right of action, the temporary payments right of action and the government compensation right of action, and then this paper put forward my opinions and suggested improvements about the point in dispute related with prohibitive provisions of seize or assignment regulated in the Act on Guarantee of Compensation for Loss Caused by Automobile. The Act provisions prohibiting the seizure and assignment with respect to the above rights prescribed in Article 40 will have to be applied by the interests of victims and in applying these provisions will also be no bias in the equity of the victims.
  • 3.

    Derivatives Use and Corporate Performance in the Life Insurance Industry

    Byun, Hee Sub , 조영현 | 2016, 27(3) | pp.81~115 | number of Cited : 1
    Abstract PDF
    This paper investigates whether the Korean life insurance companies' use of derivatives has effectiveness as a risk management. Empirically, we confirm that the derivatives use has a significantly positive effect on the corporate performance measured by profitability. This effect is mainly observed when the purpose of the derivatives use is risk avoidance, and when the firm has relatively small scale of assets. Additionally, we find that the derivatives use reduces the distressed assets. In the mean time, among the various types of derivatives, the currency derivatives, forwards, futures, and swap have positive effect on corporate performance. This paper provides practical implications for the life insurance companies to minimize the risk and to maximize the profit by strategically using the derivatives.
  • 4.

    A Study on Value Relevance of Solvency Margin Ratio and Operational Efficiency in the Non - life Insurance Companies

    cho, seok-hee | 2016, 27(3) | pp.117~154 | number of Cited : 5
    Abstract PDF
    This study empirically examined the value relevance of non-life insurance companies' solvency margin ratio(hereafter 'SMR') and operational efficiency using the samples consisting non-life insurance companies listed on the Korean Stock Exchange. The results are as follow; First, there is a positive association between the SMR and firm's value after controlling for firm's equity book value and net income, but the relative value relevance of SMR is not significantly higher than debt ratio. Second, this paper provide a empirical evidence that DEA efficiency measure has a incremental value relevance which equity book value and net income have not, but DEA efficiency measure is significantly lower than statutory efficiency measure(earned-incurred loss ratio and net expense ratio). This study has a significant meaning because the incremental and relative value relevance of the SMR and DEA efficiency measure in the non-life insurance industry were directly analysed in this paper, differently from previous studies.