This report is prepared for commemoration of publication of the 100th issue of the Journal of Insurance and Finance. It is a summary of research trends over the past 30 years published in this journal. A total of 566 articles have been published since the 1st issue in December 1990. Twelve categories of research subjects are identified and major studies in each category are briefly surveyed to provide ideas on historical research trends. Form the inception in 1990 to 2000, most extensively investigated are those issues as to business strategy, regulation, and solvency under the environment of deregulation and market opening. Since entering into the 21st century, papers on insurance demand and actuarial aspects of insurance tend to be dominant. In the future, more theoretical research on insurance economics is required and particularly needed is a research infrastructure to procure data for diverse and sophisticated empirical research in the area of insurance.
This study intends to analyze the intention to use the trust-method reverse mortgage for the first time in order to resolve the instability of spouse supply and demand in the past, and to make a policy proposal to expand the use of the trust-method reverse mortgage. As a result of analysis of the intention to use the trust-method reverse mortgage, the most important factors influencing the intention to join the trust-method reverse mortgage are relationships with children in case of participating in reverse mortgage, intention to inherit the house, needs for education to prepare for retirement, sufficient preparation for retirement, and knowledge of reverse mortgage. In order to invigorate the trust-method reverse mortgage, it is important to communicate the concept and advantages of the trust-method reverse mortgage to the target audience. In addition, it is considered that education, public relations, and counseling for children should be strengthened so that the parents' participation in the trust-method reverse mortgage can help the parents' retirement and reduce the burden on their children.
This paper examines the effect of the U.S. property and liability insurance companies’ product diversification on financial derivatives usage. Prior studies discussed the diversification of the firm but have not incorporated its relation with the derivatives particularly for options. We focus on the firms' product diversification with the use of options and reinsurance for hedging purposes. This paper finds the following evidence. First, there is no significant evidence of diversification effect using all types of derivatives. Second, firms' product diversification is positively associated with the options. This implies that diversified firms are exposed to greater asset risk which results in increased demand for options to hedge. Last, there exists a negative relation between reinsurance and options supporting that they are considered as substitutes.
There are few research results dealing with consumption of variable annuities, empirically using micro data. We analyse the characteristics of variable annuity policyholders and the determinant factors that affect consumption of variable annuities, using insurance consumer survey data (2017-2019) of the Korea Insurance Research Institute. The results of this study are as follows. The rate of variable annuity holders was 2.9% in average but it was declining from 2017 to 2019. Regression analysis shows that the propensity for consuming variable annuities is statistically significant in highly educated and high income consumer, which is a consistent result with prior research papers of the United States. Moreover, there is an inverted U-shaped relationship between age and the propensity. Though the propensity is higher for female in average, it is higher for male when income levels are higher. The propensity to hold variable annuities is higher for single females with older ages than younger ones. The results provide useful information for life insurance companies to understand the characteristics of the consumers for variable annuities.
The paper analyzes a sample of closed automobile accident claim cases drawn from a large Korea insurer in order to test whether claimants decide bodily injury claims for settlement payment and the relationship between settlement payment and medical expense. The test result shows that minor accident injurers intend to claim bodily injury liabilities for settlement payment and that claimants receive proportionally lower settlement payment when medical expenses exceed insurer’s expected value. These results imply that the indemnification schedule of a Korea auto insurance company seems to deter excess medical expense as literature has shown.
This study empirically investigates the practical applicability of Markowitz (1952) optimization function through correlation matrixes among stocks in the Korean stock market. The proposed method is a correlation matrix that removes the property of a market factor included in the sample correlation matrix, that is, the non-market correlation matrix. For comparison with the previous studies, the correlation matrixes that is known in the optimal portfolio are utilized, along with equal-weighted and value-weighted portfolios. According to the results, the optimal portfolio from the non-market correlation matrix may construct better diversified portfolio, and then, achieve lower risk and higher performance compared to other correlation matrixes. In comparison by the perspective of prediction error from expected return and standard deviation of returns, moreover, the optimal portfolio from the non-market correlation matrix has much lower magnitude of sensitivity from prediction error of input variables than those from the other correlation matrixes. These results show the evidence supporting that the non-market correlation matrix has a comparative benefit for improving the practical applicability of the optimal function as well as for effectively reducing the influence of prediction error from input variables.