Determinants of Profitability of Life Insurers in India- Panel Evidence
Keywords:
Profitability, Insurance, micro-economic variables, return on assets, return on equityAbstract
The purpose of this paper to identify the factors that affect the profitability of life insurance companies in India using a panel data. The study includes twelve life insurance companies for a period covering 2005-2015. In this study, econometric analysis has been adopted to determine the impact of micro-economic factors on the profitability of life insurers in India. The findings of the analysis reveal that out of nine independent variables only three significantly explain the profitability of life insurers as measured by ROA. The results reveal that liquidity, loss ratio, investment performance, operating margin, premium growth, and tangibility are significant in determining the profitability, as measured by ROA, of Indian life insurers. On the other hand, leverage, commission ratio, and size are insignificant in explaining the profitability as measured by ROA.
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