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Empirical Analysis of the Risks and Resilience to Shocks of the Macedonian Insurance Sector

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  • Blagica Petreski

    (Finance Think-Skopje, Jordan Mijalkov 50/3, Skopje 1000, Macedonia.)

Abstract

The objective of this paper is to analyse the risks to the stability of the Macedonian insurance sector and to quantify its resilience to shocks. In the empirical economic model, insurance sector stability, as measured through the log of the solvency margin, is a function of total claims settled in total gross premiums, market concentration, product concentration, deposit interest rates, inflation rate and GDP growth. The analysis covers all 11 non-life insurance companies over the period from 2008:Q4 to 2014:Q2, using panel methods and Monte Carlo simulation. The results suggest that only claims settled as a measure of individual insurance risks and the inflation rate as a measure of market risks affect the stability of the Macedonian insurance sector. Stress simulations indicate that the Macedonian insurance sector remains robust even under extreme shocks. However, the stress tests of the individual companies reveal that 3 out of 11 companies fail the stress test.

Suggested Citation

  • Blagica Petreski, 2015. "Empirical Analysis of the Risks and Resilience to Shocks of the Macedonian Insurance Sector," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 40(4), pages 678-700, October.
    • Handle: RePEc:pal:gpprii:v:40:y:2015:i:4:p:678-700
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    Cited by:

    1. Hui Shan Lee & Shyue Chuan Chong & Shen Yap & Bik Kai Sia & Ying Xi Chen, 2021. "Does Economic Freedom in Host Countries Lead to Increased Non-Life Insurance Development?," SAGE Open, , vol. 11(4), pages 21582440211, October.

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