COVID-19 pandemic and firm performance in the insurance industry in developed and emerging markets

  • Received August 25, 2023;
    Accepted October 24, 2023;
    Published November 17, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/ins.14(1).2023.08
  • Article Info
    Volume 14 2023, Issue #1, pp. 85-98
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This work is licensed under a Creative Commons Attribution 4.0 International License

This study aims to analyze the impact of the COVID-19 pandemic on insurance companies` performance. Data spanning 2018 to 2022 from the Wall Street Journal Database was employed, encompassing 1,931 companies across 65 countries. The research distinguishes between developed (808 insurers) and emerging markets (1,123 insurers) to identify more real consequences of the pandemic. The random effects model was utilized for regressions, which run in three stages. The dependent variables (Return on Assets and Return on Equity) and the independent variables (the COVID-19 pandemic and four firm-specific factors such as claim expenses, company size, leverage, and liquidity) were analyzed. In developed markets, the study confirms the significant negative consequences of the COVID-19 pandemic on insurance firms, resulting in a global decline in performance. Conversely, emerging markets reveal a different scenario where company size plays a substantial role in insurance company performance, particularly in return on assets, aligning with findings favoring larger insurance entities. However, when considering company size’s interaction with COVID-19, larger insurers in emerging markets experienced performance declines during the pandemic. While leverage significantly affects insurance firm performance in both market types, its interaction with the pandemic shows no substantial impact. Liquidity, as represented by cash holding does not significantly enhance performance, particularly in developed markets, but higher cash reserves during the pandemic negatively affect performance, primarily in emerging markets. These findings provide insights for insurance company managers to develop adaptive strategies amid evolving market conditions and potential crises, including pandemics like COVID-19.

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    • Table 1. Distribution of the sample companies by country
    • Table 2. Dependent and independent variables
    • Table 3. Descriptive statistics
    • Table 4. Correlation matrix
    • Table 5. COVID-19 and firm performance
    • Table 6. COVID-19 and firm performance – Developed markets
    • Table 7. COVID-19 and firm performance – Emerging markets
    • Conceptualization
      Ardi Paminto, Ibnu Abni Lahaya, Muhammad Iqbal, Rizky Yudaruddin
    • Funding acquisition
      Ardi Paminto, Rizky Yudaruddin
    • Methodology
      Ardi Paminto, Rizky Yudaruddin
    • Validation
      Ardi Paminto, Yanzil Azizil Yudaruddin, Rizky Yudaruddin
    • Writing – review & editing
      Ardi Paminto
    • Data curation
      Ibnu Abni Lahaya, Rizky Yudaruddin
    • Formal Analysis
      Ibnu Abni Lahaya, Muhammad Iqbal, Yanzil Azizil Yudaruddin
    • Project administration
      Ibnu Abni Lahaya, Muhammad Iqbal, Yanzil Azizil Yudaruddin
    • Software
      Ibnu Abni Lahaya, Muhammad Iqbal, Yanzil Azizil Yudaruddin
    • Supervision
      Ibnu Abni Lahaya, Muhammad Iqbal, Rizky Yudaruddin
    • Visualization
      Ibnu Abni Lahaya, Muhammad Iqbal
    • Investigation
      Muhammad Iqbal, Yanzil Azizil Yudaruddin, Rizky Yudaruddin
    • Resources
      Yanzil Azizil Yudaruddin, Rizky Yudaruddin
    • Writing – original draft
      Yanzil Azizil Yudaruddin, Rizky Yudaruddin