Now showing 1 - 10 of 74
  • Publication
    Asset-Liability Management for Long-Term Insurance Business
    (Springer, 2018)
    Albrecher, Hansjörg
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    Bauer, Daniel
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    Embrechts, Paul
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    Filipovic, Damir
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    Koch-Medina, Pablo
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    Korn, Ralf
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    Loisel, Stephane
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    Pelsser, Antoon
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    Schiller, Frank
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    This is a summary of the main topics and findings from the Swiss Risk and Insurance Forum 2017. That event gathered experts from academia, insurance industry, regulatory bodies, and consulting companies to discuss past and current developments as well as future perspectives in dealing with asset-liability man- agement for long-term insurance business. Topics include valuation, innovations in insurance products, investment, and modelling aspects.
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    Scopus© Citations 13
  • Publication
    Long-Term Care Models and Dependence Probability Tables by Acuity Level: New Empirical Evidence from Switzerland
    (North Holland Publ. Co., 2018-06-02)
    Fuino, Michel
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    Due to the demographic changes and population aging occurring in many countries, the financing of long- term care (LTC) poses a systemic threat. The scarcity of knowledge about the probability of an elderly person needing help with activities of daily living has hindered the development of insurance solutions that complement existing social systems. In this paper, we consider two models: a frailty level model that studies the evolution of a dependent person through mild, moderate and severe dependency states to death and a type of care model that distinguishes between care received at home and care received in an institution. We develop and interpret the expressions for the state- and time-dependent transition probabilities in a semi-Markov framework. Then, we empirically assess these probabilities using a novel longitudinal dataset covering all LTC needs in Switzerland over a 20-year period. As a key result, we are the first to derive dependence probability tables by acuity level, gender and age for the Swiss population. We find that the transition probabilities differ significantly by gender, age and time spent in the frailty level and type of care states.
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    Scopus© Citations 19
  • Publication
    Profitability and Growth in Motor Insurance Business – Empirical Evidence from Germany
    (Palgrave Journals, 2018)
    Maichel-Guggemoos, Liselotte
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    Over recent years, the German motor insurance business has faced significant changes, including a growing importance of direct insurance offerings. Motor insurance products are offered by a wide range of insurers, with companies differing in terms of legal status, size, product portfolio, distribution strategy and operational efficiency. Furthermore, one distinguishes between two main products, namely motor third-party liability (MTPL) and motor own damage (OD). In our research, we analyse to what extent the characteristics of the companies can explain the premiums, the total claims costs and the operating expenses per contract in MTPL and OD. For our analysis, we use panel data of insurance companies, offering motor insurance products in Germany, for the years 2002–2014. The panel data provide almost full market coverage. In our study, we apply different statistical tests and multilinear regression models. We show that mutuals relate to lower premiums, lower total claims costs and lower operating expenses per contract when compared to listed companies. In addition, direct insurance companies get along with lower premiums and lower operating expenses per contract compared to traditional com- panies selling via agents or brokers. Furthermore, we find major differences related to the range of the product portfolio, the size of the motor business, the dominance of the motor business within the non-life business, and the calendar year. Our results are relevant to academics and practitioners alike and help to better understand the German motor insurance business.
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    Scopus© Citations 3
  • Publication
    Forecasting the next likely purchase events of insurance customers A case study on the value of data-rich multichannel environments
    (Emerald, 2018)
    Mau, Stefan
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    Pletikosa, Irena
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    Purpose – The purpose of this paper is to demonstrate the value of enriched customer data for analytical customer relationship management (CRM) in the insurance sector. In this study, online quotes from an insurer’s website are evaluated in terms of serving as a trigger event to predict churn, retention, and cross-selling. Design/methodology/approach – For this purpose, the records of online quotes from a Swiss insurer are linked to records of existing customers from 2012 to 2015. Based on the data from automobile and home insurance policyholders, random forest prediction models for classification are fitted. Findings – Enhancing traditional customer data with such additional information substantially boosts the accuracy for predicting future purchases. The models identify customers who have a high probability of adjusting their insurance coverage. Research limitations/implications – The findings of the study imply that enriching traditional customer data with online quotes yields a valuable approach to predicting purchase behavior. Moreover, the quote data provide supplementary features that contribute to improving prediction performance. Practical implications – This study highlights the importance of selecting the relevant data sources to target the right customers at the right time and to thus benefit from analytical CRM practices. Originality/value – This paper is one of the first to investigate the potential value of data-rich environments for insurers and their customers. It provides insights on how to identify relevant customers for ensuing marketing activities efficiently and thus avoiding irrelevant offers. Hence, the study creates value for insurers as well as customers.
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    Scopus© Citations 13
  • Publication
    What Customer, Policy and Distribution Characteristics Drive the Development of Insurance Customer Relationships
    (Emerald, 2018)
    Staudt, Yves
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    Purpose – Over the last decade, technological and social trends have significantly influenced the relationship between customers and insurers. New buying patterns, price comparison platforms and the usage of different interaction channels driving single-product purchases and impacting lapses have influenced insurers’ customer portfolios and development. The purpose of this paper is to study the features driving the customer relationship along three areas, namely, customer acquisition, development and retention. Design/methodology/approach – After defining 14 related hypotheses, the authors use econometric analyses to quantitatively support these hypotheses in the three areas of interest. The authors build on a large-scale longitudinal data set from a Swiss insurance company covering the period from 2005 to 2014 and including 2,757,000 customer-years. The data comprise information on private customers, their contract history, including coverage and losses and the channels used for buying insurance. This analysis focuses on the two most common non-life insurance products, namely, household/liability and car insurance. Findings – The authors provide descriptive statistics and results from econometric analyses to determine the significant features and patterns affecting customer development and retention. Among the main results, the authors underline the significant influence on cross-selling given by the customer’s age and the interaction channel. Customers from rural regions are more loyal and likely to conduct cross-buying when compared to their peers from urban regions. Car insurance holders are more likely to lapse than household/liability insurance clients. Finally, while newly acquired customers tend to buy only a single product, the authors show the importance of cross-selling for retaining customers. In fact, customer retention is positively influenced by the number of products hold. Research limitations/implications – This work is relevant for academics and practitioners alike, adding a quantitative basis to the understanding of managing customer relationships and for the development of further prospective models. Further work could investigate or add products, extend the study to other companies and focus on customer development with time. Originality/value – This study explores a large-scale longitudinal data set. The analyses of customer acquisition, development and retention can support insurers to construct their own models for customer relationship management.
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    Scopus© Citations 15
  • Publication
    The Impact of Pension Funding Mechanisms on the Stability and the Payoff from DC Pension Schemes in Switzerland
    (Palgrave Journals, 2017) ;
    Adequately funding occupational pension funds is a major concern for society in general and individual contributors in particular. The low returns accompanied with high volatility in capital markets have put many funds in distress. While the basic contributions are mostly defined by the state, the fund’s situation may require additional contributions from the insureds or may allow the distribution of surpluses. In this paper, we focus on the accumulation phase of a defined contribution plan in Switzerland with minimum returns and annual solvency targets in terms of an assets-to-liabilities funding ratio. From the viewpoint of the pension fund, we evaluate the outcome of selected funding mechanisms on the solvency situation. Taking the perspective of the contributors, we analyse the payoff and the utility. Combining both prospects, we discuss the boundary values that trigger the various participation mechanisms and their impact. We find that remediation measures, while stabilising the fund, yield a higher volatility in the insureds con- tributions. Further, surplus distributions lower the relative payoff utility of the funds members and increase the frequency of remediation measures. Overall, insureds and pension funds will profit from a cautious surplus distribution policy that focuses on keeping the stability high and lowers the volatility of the result.
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    Scopus© Citations 2
  • Publication
    Old-Age Provision Past, Present, Future
    (Springer, 2016)
    Albrecher, Hansjörg
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    Embrechts, Paul
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    Filipovic, Damir
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    Harrison, Glen
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    Koch, Pablo
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    Loisel, Stephane
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    Vanini, Paolo
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    This is a summary of the main topics and findings from the Swiss Risk and Insurance Forum 2015. That event gathered experts from academia, insurance industry, regulatory bodies, and consulting companies to discuss the past and current developments and necessary next steps for dealing with old- age provision. Topics include the pension funding gap, demographic and societal challenges, the valuation of pension liabilities, economic and regulatory capital models, and the role of financial markets.
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    Scopus© Citations 10
  • Publication
    Empirical Findings on Motor Insurance Pricing in Germany, Austria and Switzerland
    (Palgrave Macmillan, 2016-01-20) ; ;
    This paper focuses on recent developments in motor insurance pricing in Germany, Austria and Switzerland. Through the analysis of responses to a recent comprehensive survey of industry representatives, we examine the various premium components and the processes involved in premium adaptation. New findings on the use of different tariff criteria, on the tools used for market-based and customer-specific pricing, and on the information considered for customer valuation are reported. We also address the integration of the insurance sales staff in the pricing process. With regard to premium adjustments and the introduction of new tariffs, we examine the frequency, time required and costs incurred. With this paper, we contribute to a strand of literature where little academic research has been done so far. In addition, our results entail managerial implications for improving industry practices in insurance pricing.
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    Scopus© Citations 15
  • Publication
    Evolution of Strategic Levers in Insurance Claims Management An Industry Survey
    (Blackwell, 2016)
    Mahlow, Nils
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    This article discusses competing strategic goals and success factors in nonlife insurers’ claims management using new and ad hoc empirical data. We struc- ture the study of the companies’ aims along the three main conflicting goals: (1) the minimization of claims volume, (2) the optimization of internal claims processes, and (3) the maximization of customer satisfaction. We analyze the insurance industry perspective through a qualitative survey carried out in Ger- many and Switzerland. Findings on the current and expected importance of selected topics are derived. The results shall lead to managerial implications improving industry practice and serve as a starting point for further research. Our findings are relevant for academics and practitioners beyond the two mar- kets surveyed in the study.
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    Scopus© Citations 4
  • Publication
    Process Landscape and Efficiency in Non-Life Insurance Claims Management An Industry Benchmark
    (Emerald, 2016)
    Mahlow, Nils
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    Purpose – In view of the fact that claim payouts account for about 70 per cent of annual direct costs in non-life insurance companies and that claims-handling staff sums up to 10-20 per cent of all employees, an optimal claims management environment is of strategic importance. The purpose of this paper is twofold, i.e. on the one hand, the authors introduce a standardized claims management process model and, on the other hand, they apply process benchmarks to various operational parameters. Design/methodology/approach – The proposed claims management process landscape comprises current industry standards for claims handling from a theoretical perspective, supported by practice insights from the industry. Our model aims to reflect the most important claims processing activities. The claims-handling work flow is structured into five core steps, namely, notification, registration, coverage audit, settlement and closing of the claim. For these core steps, the authors differentiate between three claim complexity categories and their associated back-office levels. In the second part of the paper, the authors assess the industry’s claims-handling efficiency. The authors benchmark industry processes with reference to detailed claims management data from 11 insurers in Germany and Switzerland. Findings – The benchmarks are based on the previously defined claims management model and are applied separately to the three retail business lines of car, property and liability insurance. We measure claim process times (cycle times) as well as claim quantities and average claim payouts at different levels. Overall, within each business line, more than 30 data points are gathered from each respondent insurer. This allows us to compare the process performance of different insurance companies and to describe significant differences in their process patterns. Furthermore, principal findings are derived from descriptive statistics as well as ad hoc data analyses. Originality/value – The paper seeks to contribute to the discussion of how different insurance companies perform in claims management and to define best practice. Our findings are relevant to academics and practitioners alike.
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    Scopus© Citations 2