Forecasting the net income performance of the life insurance industry using economic and insurance development indicators through multiple linear regression

• Main Author: Berino, Dennis L.
• Format: text
• Published: Animo Repository 2018
• Subjects: Life insurance; Life insurance—Finance; Insurance
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/9270
• Institution: De La Salle University

The life insurance industry is primarily concerned with helping insureds manage the risks that they face in life through its varied product offerings. The industry, which belongs to the financial services sector, is a potent vehicle for capital formation which contributes funds for national development. It also provides meaningful engagement through employment as well as selling and financial services work for its sales force called the agency. As with all businesses, it has to generate sufficient level of net income to adhere to compliance and reserve requirements of the government, provide adequate benefit payments to its insureds when due, provide its employees with salaries and benefits and adequate commission and incentives for its agency as well as generate sufficient surplus to be a going concern.This paper determined significant variables in terms of economic indicators and insurance development metrics which affect the industry’s net income. Data was generated from the Insurance Commission website, the government agency in charge of supervising the industry’s operations. The multiple linear regression forecasting approach was used to come up with significant results. Among the economic indicators and industry development metrics considered, the one variable with statistically significant impact on net income performance was the number of its agents. It has been a challenge for the industry to recruit and develop members of its agency force who will stay with the business and generate sufficient production to contribute to the company’s sales targets as well as adequate income for the agents’ personal needs. The industry should continue its recruitment and development effort focusing on motivation, development, recognition and training activities to support this thrust.