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The Impact of Macroeconomic and Organizational Factors on the Profitability of the Insurance Industry within the TVP-FAVAR Approach

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  • Mahdi Gholami Zare
  • Amir Mansour Tehranchian
  • Ahmad Jafari Samimi

Abstract

The insurance industry, as an intermediary between economic savings and risk transfer, plays a crucial role in the allocation of financial resources and the management of economic surpluses. Therefore, analyzing the profitability of this industry is of great importance. This study aims to investigate the impact of macroeconomic and internal organizational factors on the profitability of the insurance industry from 2011 to 2022 on a quarterly basis, using the TVP-FAVAR model and Python programming for data analysis and modeling the effects of economic variables. The results of this study indicate that economic shocks, such as changes in Gross Domestic Product (GDP), inflation, oil prices, exchange rates, and other macroeconomic variables, have significant impacts on the profitability of the insurance industry. Insurance companies must adopt appropriate risk management strategies to mitigate short-term economic fluctuations and aim for long-term profitability stability by improving internal processes and developing intelligent financial models. Additionally, economic policymakers should adjust macroeconomic conditions in a way that reduces the negative impacts of economic shocks on this industry and fosters greater stability.

Suggested Citation

  • Mahdi Gholami Zare & Amir Mansour Tehranchian & Ahmad Jafari Samimi, 2025. "The Impact of Macroeconomic and Organizational Factors on the Profitability of the Insurance Industry within the TVP-FAVAR Approach," Research in Social Sciences, Academia Publishing Group, vol. 8(1), pages 53-65.
    • Handle: RePEc:ajo:reissc:v:8:y:2025:i:1:p:53-65:id:302
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