Journal of Actuarial Research

Gender Differences in Risk Preferences and Insurance Choices

Tim Oliver — 2024-03-28

Purpose: The general purpose of the study was to examine gender differences in risk preferences and insurance choices.

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 gender differences in risk preferences and insurance choices. The study provided valuable insights into the complex dynamics shaping individuals' attitudes towards risk and insurance decisions. Through comprehensive analysis, it confirmed significant gender disparities in risk preferences, with men generally exhibiting higher levels of risk tolerance compared to women. Additionally, it revealed that women demonstrated a greater propensity to purchase insurance coverage, contrary to traditional stereotypes. The study emphasized the importance of considering intersectionality in understanding gender disparities in insurance access and highlighted the role of behavioral economics in influencing decision-making processes. Overall, the findings underscored the need for targeted interventions and policy initiatives to address gender-based disparities in insurance access and promote financial well-being across diverse populations.

Unique Contribution to Theory, Practice and Policy: Social Role theory, Behavioural Economics and Feminist theory may be used to anchor future studies on risk preferences and insurance choices. The study made several recommendations to address gender disparities in risk management and insurance access. It suggested the development of targeted financial education programs, gender-sensitive insurance products, and regulatory measures to promote gender equality in insurance coverage. Additionally, the study emphasized the importance of fostering diversity and inclusion within the insurance industry and continuing research to monitor progress over time. By implementing these recommendations, stakeholders aimed to create more inclusive and equitable insurance markets, enhancing financial security and well-being for all individuals.

Keywords: Gender Differences, Risk Preferences, Insurance Choices, Financial Education, Gender-Sensitive, Regulatory Measures, Diversity, Inclusion, Equity

The Role of Actuaries in Sustainable Development Goals

Sharon Wang’ombe — 2024-03-28

Purpose: The general purpose of this study was to investigate the role of actuaries in Sustainable Development Goals.

Findings: The findings reveal that there exists a contextual and methodological gap relating to the role of actuaries in Sustainable Development Goals. The study underscored the indispensable role of actuaries in advancing sustainable development goals (SDGs) across multiple sectors. Actuaries contribute significantly to promoting environmental sustainability by assessing and managing risks associated with climate change, while also fostering social equity and inclusivity through the design of insurance and pension schemes. Moreover, they facilitate long-term investment and infrastructure development aligned with SDGs 8 and 9, and support health and well-being initiatives, particularly in healthcare financing and risk assessment. Overall, through their expertise in risk assessment, financial management, and strategic decision-making, actuaries play a critical role in driving transformative change towards a more sustainable, inclusive, and resilient future.

Unique Contribution to Theory, Practice and Policy: The Stakeholder theory, Institutional theory and Systems theory may be used to anchor future studies on the role of actuaries in Sustainable Development Goals. The study provided recommendations aimed at enhancing the contributions of actuaries to sustainable development agendas. It advocated for increased awareness among actuaries about their role in supporting SDGs, fostering collaboration between stakeholders, integrating sustainability considerations into actuarial practices, and promoting transparency and accountability within the profession. These recommendations emphasized the importance of aligning actuarial efforts with sustainability goals, leveraging collective expertise, and ensuring ethical and responsible decision-making. By implementing these recommendations, actuaries could play a more proactive and impactful role in advancing sustainable development goals and addressing societal challenges.

Keywords: Actuaries, Sustainable Development Goals, Contributions, Recommendations, Awareness, Collaboration, Sustainability Considerations, Transparency

Assessment of Climate Change Risk on Insurance Portfolios

Eva Luiz — 2024-03-28

Purpose: The general purpose of this study was to investigate the assessment of climate change risk on insurance portfolios.

Findings: The findings reveal that there exists a contextual and methodological gap relating to climate change risk on insurance portfolios. The assessment of climate change risk on insurance portfolios reveals the significant challenges posed by increasingly frequent and severe climate-related events, impacting insurers' financial stability and policyholders' security. Key conclusions emphasize the imperative for insurers to enhance climate risk modeling, integrate climate considerations into decision-making processes, and foster collaboration with stakeholders to develop effective risk management solutions. Proactive measures are essential to address the systemic nature of climate risks, underscoring the urgency of collective action and innovation to build resilience and sustainability in insurance portfolios and broader society amidst a changing climate.

Unique Contribution to Theory, Practice and Policy: The Prospect theory, Agency theory and the Resilience theory may be used to anchor future studies relating to climate change risk on insurance portfolios. Insurers are advised to invest in advanced risk modeling, diversify risk exposure across regions and lines of business, integrate climate risk into underwriting and pricing, strengthen regulatory oversight, collaborate with stakeholders, and invest in climate adaptation and mitigation measures. These recommendations aim to improve insurers' ability to quantify and manage climate-related risks effectively, promote sustainability, and contribute to broader resilience-building efforts in the face of climate change.

Keywords: Climate Change Risk, Insurance Portfolios, Resilience, Risk Modeling, Diversification, Underwriting, Regulatory Oversight, Collaboration

Regulatory Changes and Their Impact on Insurance Market Dynamics

Alice Kavubu — 2024-03-28

Purpose: The general purpose of the study was to examine regulatory changes and their impact on insurance market dynamics.

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

Application of Machine Learning Techniques in Insurance Underwriting

Nolan Bishop — 2024-03-28

Purpose: The general purpose of the study was to examine the application of machine learning techniques in insurance underwriting.

Findings: The findings reveal that there exists a contextual and methodological gap relating to the application of machine learning techniques in insurance underwriting. The study on the application of machine learning techniques in insurance underwriting concludes that these algorithms offer significant potential to enhance accuracy, efficiency, and risk assessment capabilities in the industry. By leveraging advanced analytics and innovative technologies such as telematics data and natural language processing, insurers can make more informed underwriting decisions and pricing strategies. However, challenges remain in ensuring model interpretability, fairness, and regulatory compliance. Continued research and development efforts are essential to address these challenges and unlock the transformative benefits of machine learning in underwriting while fostering a culture of trust and accountability in AI adoption.

Unique Contribution to Theory, Practice and Policy: The Decision theory, Information theory and Bayesian Decision theory may be used to anchor future studies on insurance underwriting. The study provided several recommendations to enhance underwriting processes and improve risk assessment accuracy. It recommended integrating ensemble learning methods, emphasizing feature selection and dimensionality reduction, continuously monitoring and updating models, enhancing data governance and privacy protections, and investing in talent and training. These recommendations aimed to optimize underwriting accuracy, efficiency, and risk management capabilities in an evolving data-driven landscape, ensuring insurers remained competitive and compliant with regulatory standards.