2011, Vol.22, No.1

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

The increase in insurance losses due to vehicle accidents leads to increased social costs and negatively affects public welfare. Accordingly, the auto insurance company may face pressure to raise premiums. However, auto insurance has social aspects and it is not so easy to raise premiums even if company faces a serious pressure to do so. Thus, the best way to decrease consumer complaints about premium increases and reduce the social costs due to motor vehicle accidents is to reduce the number of motor vehicle accidents. In order to achieve this, it is important to analyze the causes of accidents and to find effective ways to reduce accidents. In this paper, we analyze the direction of many of these efforts to reduce motor vehicle accidents and find a better way to achieve this. We think one can reduce auto accidents by identifying and concretely measuring different factors which affect damage level in each type of accident. To do this, we use a linear mixed-effects model to identify the relationship between accident types and losses. Analysis tells that the number of wounded person and partial loss in small accidents show the highest elasticity. Therefore, in order to reduce the number of small accidents,we propose ways to improve 'premium based on physical accidents' and 'systems on unknown perpetrator damage accident'.

We re-examine the demand for insurance by considering the case where the individuals are allowed to purchase risky assets as well as insurance coverage. In our model the individuals are exposed to both insurable risk and investment risk, and so the risky investment decision is made simultaneously with the insurance decision. Our analysis is based on mean-variance criterion, which leads to very intuitive results about insurance purchase. The results show that risky investment can be used for reducing the overall portfolio risk, holding the portfolio expected value fixed. This demonstrates that the risky investment plays an obvious role of home-made insurance, specified in Mayers-Smith (1983). Moreover, in contrast to Mossin (1968), it can be optimal for the individuals to purchase full insurance even when insurance premium is positively loaded. Mossin's results are reduced to be a special case in our model. We also identify conditions for Mossin's results to hold. We also derive many interesting and important results on interdependence between insurance and investment,which may not be possible for a general expected utility model in most cases.

This study provides a comprehensive examination on recent fund performance by analyzing a large set of both mutual funds and fund attributes in Korea. Numerous variables are considered from a list of explanatory variables used in previous studies that link performance to firm-specific characteristics. The samples of the study are collected after adjustment of survivorship bias. A modified Jensen's alpha for a fund is estimated from the Fama-French 3 factor model to be used as dependent variables. The full model for regression comprises a base model and an extended model. The former accounts for general market conditions and fund investment objective, while the latter considers 16 individual factors and characteristics variables that impact fund performance in addition to a persistence variable. The study shows mixed results for the hypothesized relationship between performance and the explanatory variables. On one hand, the variables for total fund assets, fund flow and age of fund are positively related to fund performance. On the other hand, the variables for net asset value, relative holding and PER are negatively related to fund performance. The rest of independent variables such as market capitalization, number of holdings, relative NAV, expense ratio and management fee ratio have no significant effects on fund performance. Finally, after controlling for fund-specific factors as well as economy-wide factors, the results refute the performance persistence phenomenon.