2010, Vol.21, No.1

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

This paper shows how market rates of interest would affect rates of return on the investment of life insurance companies. To analyze the effects, we include interest rates, rates of return on stocks, and each volatility in the regression model for independent variables with rates of return on assets for a dependent variable using a partial adjustment model. We summarize the results as follows: First, the interest rates have a statistically significant and positive relationship with the rates of return on investment for both life insurance industry and three classes of life insurance companies. This result seems to be due mainly to a positive relationship between the interest rates and the rates of return on loans and short-term securities. Second, the volatility of interest rates is negatively related to the rates of return on investment for small, medium and foreign companies, while positively related to those for large ones. Third, the rates of return on stocks and their volatility are positively related to the rates of return on investment, but the effects appear to be negligible relative to the market interest rates. Finally, the speed of adjustment estimated for small and medium companies is relatively high and the maturity of asset portfolios is short.

This study evaluates whether private health insurance and private pension are alternatives in preparing for the elderly stage in life. Particularly, I test whether people with health insurance is likely to have private pension as precautionary savings. A bivariate probit model is employed to treat the correlation of errors between two equations. The result shows that people with private health insurance tent to have private pension at the same time. This result implies that private health insurance and private pension could be complements in terms of preparation for old age.

The recent changes in insurance intermediaries should help establishing sound work ethics of the insurance intermediaries and enhancing the trustworthiness of the insurance contracts. And this is why we have to carefully examine the prudence of insurance intermediaries. Since the majority of insurance contracts is made through the insurance intermediaries, the prudence of insurance intermediaries is the key to discuss the soundness of the insurance contracts as a social issue. The revised draft of the Insurance Law is imperfect in that it fails to make the independent insurance agency accountable for its violation. It is the problem of Article §102 of the Insurance Law and one of the important issues of insurance agency's supervising programs. In this paper, I propose a new revised draft about the insurance agency making independent corporate insurance agencies accountable for their violation, upholding their guarantee money, preventing by-passing contracts and inadequate support of the independent corporate agents, effectively sanctioning the violating agents(prohibition of re-registration), securing transparency and self-control system, making a duty of continuing re-education program, announcing the wrong sales cases and planning of rational commission.