2017, Vol.28, No.3

Journal of Insurance and Finance 2023 KCI Impact Factor : 0.59

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

The purpose of this paper is to empirically examine whether the government’s policy on automobile insurance premium in 2015(surcharging special rate on luxurious automobiles) is justified under the circumstance of rapidly increasing foreign cars. The paper applies the fixed effect model by using monthly penal data of insurance companies for three years from 2012 to 2014. The empirical result demonstrates that in the case of ‘coverage for damage to your auto’, the increase in the proportion of foreign car raises the loss ratio. In the case of ‘liability coverage on property damage’, however, the empirical result does not show statistically significant relationship between the increase in the proportion of foreign cars and the loss ratio. The results of this paper support the government’s policy implemented in 2015 on automobile insurance premium regarding special rate surcharging on luxurious (foreign) automobiles.

The costs of GMIR and GMSB are not properly recognized in the perspective of both current pricing and current reserve provision. Under IFRS17, the burden of O&G will be valued using risk neutral scenario. In the perspective of IFRS17, this paper calculates the costs of GMIR, GMSB, and GMDB for whole life insurance products by different guarantee type. This paper also performs the profit test under IFRS17 and MCEV principle. When GMIR is higher, the cost of GMIR (PR-GMIR) increases, while the cost of GMSB (PR-GMSB) and the cost of GMDB (PR-GMDB) decrease. However, the total cost of insurer (T-GMSB) increases. When pricing interest rate is higher, PR-GMIR changes slightly, but PR-GMSB increases significantly. The profit of GMSB product without guarantee fee is lowest compared with other guarantee type products due to the consideration of O&G burden. The profit of the dynamic lapse rate model is lower than that of deterministic lapse model.

This paper investigates the choices of R&D risk in a mixed duopoly market, where public and private firms compete with differentiated products and R&D investments. We then examine the effects of privatization and provide policy-relevant implications. The main findings are as follows: first, both expected consumer surplus and expected social welfare increase more with the R&D risk of public firm. Thus, public firm chooses a higher R&D risk than that of private firm, and the difference of the choices of R&D risk between two firms increases as product substitutability increases. Second, private firm chooses a lower R&D risk than the social optimum in a mixed market. Therefore, government should not only encourage the private firm to choose a higher R&D risk, but increase the intensity of market competition. Third, privatization policy induces profit-oriented privatized firm to choose a lower R&D risk. Thus, government should provide R&D incentives to encourage the firms to choose higher R&D risks in a private market.