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Simplex representation of insurance performance analysis

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  • Bharathkumar, Sai Ranjani
  • Gupta, Santanu

Abstract

The general belief in the insurance industry is that underwriting is a loss-making segment but is essential as it generates cash flow. The underwriting losses are cross-subsidized by investment income resulting in overall profits. In this paper, we investigate if the same is true in the Indian context. For this Simplex representation, (also known as trilinear plot or Saari Triangle) a tool in the field of political science, is adapted. Simplex representation can give an instant understanding of the relative performance of a company in any segment/domain. The study reveals that, contrary to expectation, it is reinsurance that has contributed more to overall aggregate performance as against investment.

Suggested Citation

  • Bharathkumar, Sai Ranjani & Gupta, Santanu, 2020. "Simplex representation of insurance performance analysis," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 419-436.
    • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:2:p:419-436
    DOI: 10.1016/j.jpolmod.2019.06.010
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    More about this item

    Keywords

    Underwriting; Investment; Reinsurance; Simplex representation; Performance;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H89 - Public Economics - - Miscellaneous Issues - - - Other
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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