2012, Vol.23, No.3

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

Using the stochastic frontier analysis, this paper investigates the efficiency and productivity of life insurance companies during the period 1998-2008. In addition, we estimate the effects of the introduction of bancassurance and variable insurance on their technical efficiency and technical progress. The empirical results show that technical efficiency has increased over time, but technical progress has not. The contribution of technical progress to their productivity appears to be greater than that of technical efficiency. As a consequence, the improvements in productivity have slowed down over time. On the other hand, the technical progress of life insurance companies using bancassurance is significantly greater than otherwise. However, for variable insurance,neither technical efficiency nor technical progress is significantly different.

This study investigates the impact of advertising expenditure on the price sensitivity of insurance demand and surrender and lapse rates. Especially, we test two forms of hypothesis on advertising: (1) a persuasive view of advertising, in which advertising could reduce consumers' price sensitivity and (2) an informative view of advertising,in which it is likely to increase consumers' price sensitivity. We show the followings : First, a model, using premium as a dependent variable, supports the persuasive views of advertising as the sign on coefficients of the insurance price is negative and the inter-action term is negative. Secondly, another model, using surrender and lapse rates as a dependent variable, also supports the persuasive views of advertising as the signs on coefficients of the insurance price and the inter-action term are all negative. These results imply that increasing consumers' loyalty by enhancing brand images is more effective for insurance companies than price differentiation strategies to maintain high price sensitivity by the advertisement focusing on the function of insurance products.

Using the 2009 Korean Retirement and Income Study (KReIS), this study analyses the demand and adequacy of private pension from the sample of pre-retirees younger than age 60 currently working. We investigate the demand of private pension by private pension ownership,estimated total private pension wealth at retirement, and annuitized amount of the private pension wealth. we also investigate the adequacy of private pension by the ratio of the private pension to minimum and appropriate amount of living expenses during retirement, and the ratio of the estimated total private pension wealth to financial assets. Our study shows that the demand and adequacy of private pension increases in the group of younger, highly-educated, and engaged in professional occupations. In addition, this tendency is stronger for those who save money for retirement and have more retirement grants, financial assets,and national pension. Also, there is a tendency that city workers would have less demand and lower adequacy of the private pension. Non-financial assets are partially related to the demand and adequacy of private pension, and health and debts do not have significant effects. In conclusion, educational attainments, age, living area, purpose of savings, and assets are significant determinants for the demand and adequacy of private pension. Especially, the demand and adequacy of private pension are higher for those who save for retirement, have more national pension assets and retirement grants, and more financial assets. Thus, these results imply that a gap between rich and poor will be continued or even bigger for the future retirees.