2015, Vol.26, No.1

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

The insurance contract is concluded on the basis of good faith and required for higher utmost good faith than good faith required in ordinary civil contract. Therefore, the insurers decide to accept the insurance based on information, which was offered from the insured or policyholder, and the insurers gain a basic information for indemnity calculation amount supplied from them. However, insurance contracts are difficult to exist, if the insured and policyholder take advantage of insurance with malicious intent. There is no gainsaying that insurance contracts intrinsically stir up the passion of gambling. So the insured or policyholder are not free from temptation of gaining unjust compensation by insurance. Especially, duty of disclosure is important system between the insurer and the insured in insurance contracts; however, most of people misuse and misunderstand duty of disclosure for gaining compensation by the back door. Therefore, I think that we cannot eradicate fraudulent insurance contracts, derived from moral hazard of insurance system by depending on conscience of the insured or policyholder. For this reason, this article suggests that fraudulent insurance contracts need to be canceled, because it is no reason to protect fraudulent insurance contracts when the contracts was made by fraud intention of the insured or policyholder. Thus, this article, first of all, went into the prerequisite and effect of breach of duty of disclosure, secondly, kept an eye out for relationship between breach of duty of disclosure of policyholder, insurance planner and insurance agent, etc., and fraudulent insurance contracts, and lastly, searched contents of fraudulent insurance contracts of Amendments of the Commercial Law that is proposed by government in 2008, but it is discarded by expiration. And then this article is intended to suggest that the need for the amendment of the Commercial Law to protect sound social order and sustain of trade order.

The regulator of Korean insurance industry concerned about the reinsurance deficits, since reinsurance deficits have continued even after the economic growth of Korean became modest. Although many insurance literature have studied theoretically the optimal reinsurance structure, none of them have empirically measured whether a primary insurer or market cede more than necessary. The paper tried to fill the gap. The objective of this paper is to examine whether the Korean P/L insurers as a whole retain or cede more or less than the optimal level a given risk-based capital framework. We first estimate the required capital(RC) for the insurers in 2012 based on past loss experience from 2000 to 2011. Then, we calculate the available capital(AC) of the insurers based on the current RBC regulation. We finally compare the RC(required capital) to AC(available capital) and find that the Available-to-Required Capital Ratio of the insurers is 247% with confidence level 95%. Although our evidence suggests that the Korean P/L insurers could retention more than the current level, more researches are warranted to confirm the argument considering conservative risk appetite and risk-taking strategies of Korean insurers.

CEO has incentive to manage their reputation from either private benefits of control or career concern. We examine whether CEO's incentive to manage their reputation can affect CSR activity of the firm they manage. Further, we explore the effect of CSR, driven by such incentive, on firm value and short-term performance. Using Korean companies from 2005 to 2010, we find significantly positive relation between CEO's incentive to manage their reputation and CSR activities after controlling governance and firm characteristic variables. Non-family CEO, with greater incentive for reputation management, significantly increases the CSR activities more. Further, we find that CSR does not increase firm value when CSR is made by non-family CEO with greater incentive for reputation management. Even worse, these incentive driven CSR significantly decreases firm value. We interpret the result that CSR activities could be exploited as a means to improve CEO's reputation, when the CEO has larger incentive to manage their reputation.