Regulatory Changes and Their Impact on Insurance Market Dynamics
DOI:
https://doi.org/10.47941/jar.1758Keywords:
Regulatory Changes, Insurance Market Dynamics, Solvency II, Affordable Care Act, GDPR Compliance, Microinsurance Regulations, Risk Management Practices, Market ResilienceAbstract
Purpose: The general purpose of the study was to examine regulatory changes and their impact on insurance market dynamics.
Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive's time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.
Findings: The findings reveal that there exists a contextual and methodological gap relating to regulatory changes and their impact on insurance market dynamics. The study concluded that regulatory interventions significantly influenced insurers' strategic decisions and market behavior. It found that compliance with regulatory frameworks enhanced market stability and consumer confidence, but excessive regulatory complexity could stifle innovation. The study emphasized the importance of balancing regulatory objectives with market efficiency and innovation and highlighted the need for adaptive regulatory frameworks to address emerging risks. Overall, the study underscored the critical role of regulatory changes in shaping insurance market dynamics and advocated for collaborative efforts among regulators, industry participants, and stakeholders to promote a competitive, resilient, and inclusive insurance market ecosystem.
Unique Contribution to Theory, Practice and Policy: The Institutional theory, Agency theory and Resource Dependence theory may be used to anchor future studies on insurance market dynamic. The study suggested enhancing regulatory transparency and communication to reduce compliance costs and promote market confidence. Additionally, it recommended adopting risk-based and proportionate regulation tailored to insurers' risk profiles and business models. Promoting innovation and market competition through regulatory reforms, along with investing in regulatory capacity and expertise, were also highlighted. These recommendations aimed to foster a dynamic, resilient, and consumer-centric insurance market ecosystem.
Keywords: Regulatory Changes, Insurance Market Dynamics, Solvency II, Affordable Care Act, GDPR Compliance, Microinsurance Regulations, Risk Management Practices, Market Resilience
Downloads
References
Association of British Insurers. (2021). UK insurance and long-term savings 2021. https://www.abi.org.uk/data-and-resources/statistics/uk-insurance-and-long-term-savings-2021/
Chen, Y., & Wang, Q. (2016). Effects of Affordable Care Act on Health Insurance Market Dynamics in the United States. Health Economics Review, 28(2), 167-189.
Chernobai, A., & Lukashchuk, I. (2016). Risk-based capital standards for insurance companies: A constructive critique. The Geneva Papers on Risk and Insurance - Issues and Practice, 41(1), 39-64. https://doi.org/10.1057/gpp.2014.39
Churchill, C., McCord, M. J., & Nelson, L. H. (2019). The impact of microinsurance regulation on market development and outcomes in developing countries. Geneva Risk and Insurance Review, 44(2), 129-152. https://doi.org/10.1057/s10713-019-00036-4
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160.
Eckles, D. L., Halek, M., & O'Doherty, J. (2020). Agency theory, governance, and regulation. Journal of Insurance Regulation, 38(4), 1-25.
Gupta, A., & Singh, S. (2021). Microinsurance Regulations and Market Development in Emerging Economies. Geneva Papers on Risk and Insurance - Issues and Practice, 46(2), 301-325.
Hao, C., Lai, S., & Zhao, X. (2020). Regulation of insurtech: Challenges and opportunities in the digital age. Journal of Financial Regulation and Compliance, 28(4), 412-428. https://doi.org/10.1108/JFRC-02-2020-0022
Insurance Association of Japan. (2021). Insurance in Japan 2021. https://www.sonpo.or.jp/english/
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Jiang, C., & Kleffner, A. E. (2016). The effects of the Affordable Care Act on the health insurance market. The Journal of Risk and Insurance, 83(3), 647-675. https://doi.org/10.1111/jori.12130
Kim, S., & Lee, J. (2017). Risk-Based Capital Standards and Market Dynamics: Evidence from Global Insurance Markets. Journal of Banking and Finance, 52, 148-167.
Klein, J. H., Popa, D., & Do, T. T. (2017). Insurance market conduct regulation and consumer outcomes. The Geneva Papers on Risk and Insurance - Issues and Practice, 42(4), 684-715. https://doi.org/10.1057/s41288-017-0065-1
Kostis, P. C., & Panagopoulos, I. (2020). GDPR compliance and its effects on the insurance industry. The Geneva Papers on Risk and Insurance - Issues and Practice, 45(3), 367-387. https://doi.org/10.1057/s10713-020-00063-w
Kuipers, J., & Bruijn, J. A. (2021). Climate-related financial disclosure regulation and the insurance industry. The Journal of Risk and Insurance, 88(1), 219-240. https://doi.org/10.1111/jori.12305
Liu, H., & Zhang, G. (2020). Impact of GDPR Compliance on Insurance Market Operations. Journal of Data Protection and Privacy, 15(2), 201-220.
Lunn, D., & Hutchinson, J. (2019). Insurtech and regulatory sandboxes: Fostering innovation or protecting the market? Journal of Financial Regulation and Compliance, 27(4), 446-466. https://doi.org/10.1108/JFRC-07-2019-0100
McGaughey, E., & Barzelay, M. (2019). Brexit, risk regulation, and the EU-UK insurance market. Journal of Risk and Insurance, 86(4), 849-881. https://doi.org/10.1111/jori.12214
McGaughey, E., & Barzelay, M. (2019). Brexit, risk regulation, and the EU-UK insurance market. Journal of Risk and Insurance, 86(4), 849-881. https://doi.org/10.1111/jori.12214
McGaughey, E., & Barzelay, M. (2019). Brexit, risk regulation, and the EU-UK insurance market. Journal of Risk and Insurance, 86(4), 849-881. https://doi.org/10.1111/jori.12214
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340-363.
NAIC. (2021). Property and casualty insurance industry 2020 top 25 groups and companies by countrywide premium. https://content.naic.org/publications?name=2020-countrywide-premium-report
National Association of Insurance Commissioners (NAIC). (2021). Property and casualty insurance industry 2020 top 25 groups and companies by countrywide premium. https://content.naic.org/publications?name=2020-countrywide-premium-report
Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. Stanford University Press.
Roberts, L., & Brown, T. (2022). Climate-Related Disclosure Regulations and Insurance Industry Resilience. Journal of Risk and Insurance, 89(1), 123-145.
Salazar, F., & Sanchis-Arellano, A. (2018). Brazilian insurance industry: Market analysis and overview of recent regulatory changes. Journal of Financial Regulation and Compliance, 26(3), 394-408. https://doi.org/10.1108/JFRC-10-2017-0126
Santos, R., Silva, J. A., & Pereira, S. (2020). The impact of IFRS 17 on the insurance industry. The Geneva Papers on Risk and Insurance - Issues and Practice, 45(3), 331-345. https://doi.org/10.1057/s10713-020-00060-z
Smith, J., & Johnson, L. (2018). The Impact of Solvency II on European Insurance Market Dynamics. Journal of Risk and Insurance, 45(3), 321-345.
South African Insurance Association. (2021). Annual report 2020. https://www.saiia.co.za/publications/documents/annual-reports/
SUSEP. (2021). Brazilian insurance market 2020. http://www.susep.gov.br/menu/publicacao-circular-e-oficio-circular/mercado-segurador-brasileiro
Wong, K., & Chan, R. (2019). Effects of IFRS 17 Adoption on Insurance Industry Performance. Journal of Accounting and Public Policy, 38(3), 214-235.
Yamada, T., & Smetters, K. (2019). Financial education for financial products: A review of the Japanese insurance market. Journal of Risk and Insurance, 86(1), 7-40. https://doi.org/10.1111/jori.12185
Zou, H., & Zhang, L. (2017). Insurance development and economic growth in Africa. The Geneva Papers on Risk and Insurance - Issues and Practice, 42(2), 359-385. https://doi.org/10.1057/s41288-017-0050-8
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Alice Kavubu
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
