2005, Vol.16, No.2

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

pISSN : 2384-3209
https://journal.kci.go.kr/kiri

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.

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.

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.