2010, Vol.21, No.2

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

The demand for a whole life annuity in pursuit of planning for one’s retirement has been gradually increasing in Korea, and this is rooted in the prolongation of average lifespan. However, this trend is not reflected in the assumed mortality, which is used when designing insurance products. In this study, we first examined mortality, survival, and longevity risks based on the mortality rate changes. Subsequently, we suggested the actuarial gain and loss inherent to a product design through an actuarial model by considering the rate changes both in ordinary mortality rate and annuity mortality rate based on the Lee-Carter model. In the case where both mortality coverage and survival coverage are included in one product, we proposed a mechanism to hedge the aggregate survival-mortality gain and loss adjusted through the mortality coverage benefit to survival coverage benefit ratio in a given period. Furthermore, we suggested a measure to achieve gain and loss management goals of insurance providers by establishing different mortality coverage benefit to survival coverage benefit ratio in order to offset the aggregate survivalmortality gain and loss variable in accordance with the mortality coverage period through our model discussed above. Finally, we emphasized the importance of establishing the assumed interest rate by presenting the aggregate gain and loss estimates as a result of effective interest rate following product management under the assumption that prospective improvement in the mortality rate is guaranteed. In conclusion, the mortality coverage benefit to survival coverage benefit ratio to make the aggregate survival-mortality gain and loss zero in this study was approximately “52.74792 to 1”in one product, and this ratio varied according to the term unredeemed. In addition, the ratio when two products exist was approximately “10.59732 to 1”. Therefore, insurance providers must perform product management with the improvement in mortality rate through internal hedging strategies taken into account in order to lead a successful business. In addition, they must pursue complete hedging by predicting future market environment and establishing an appropriately assumed interest rate.

As the growth of the number of registered vehicles has been stagnant, so has auto insurance. The number of registered vehicles is an exogenous variable that cannot be controlled by the insurer. Thus, the auto insurer can enlarge total written premiums and market size by introducing some new coverages or increasing the insured rate of existing coverages. Compared to other types of coverages, the insured rate of the collision coverage is still low but the premium size per vehicle is relatively large. Therefore, under current market condition of the auto insurance, increasing the insured rate of collision coverage would be crucial to enlarge total auto insurance market. In this paper, we analyze characteristics of the auto insured who do not purchase collision coverage by utilizing a generalized additive partial linear model. We also suggest a couple of ways to increase the insured rate of collision coverage.

Since the Retirement pension system was introduced in 2005, retirement pension providers have been heavily competing in order to increase their market shares. In the mean time, mostly due to lack of available data, empirical research, which may provide the guidelines for the competitiveness of the pension providers has been lagged behind. In an effort to partly resolve the problem, this paper empirically analyzed the technical efficiency of pension providers' retirement pension business using DEA. The empirical results show that several small retirement pension providers can gain efficiency through their low inputs, especially in labor, while large ones suffer from the severe market share competition. However, the other result using the management fees as output measure shows that some of the large pension providers operate more efficiently, while the others exhibit economies-ofscale. This means that pension management fees are considerably discounted under the rational level due to the over-competition or market practices.