Determinants of Risk Management Disclosures of Life Insurance Companies in India: An Empirical Study

Abstract

The insurance sector, with a focus on life insurance companies, has become an essential component of India’s financial landscape. It not only safeguards individuals and families from financial risks but also contributes to the country’s economic development by channelling funds into long-term investments. In the pursuit of this mission, they are tasked with managing a diverse spectrum of risks, including market risk, credit risk, morbidity risk, operational risk, persistency risk, and catastrophe risk. Risk management disclosures in life insurance companies are essential for providing stakeholders with a clear understanding of the risks the company faces and how it manages those risks. Keeping in view the certain limitations, the data of major private and public sector players (as a sample) in the field of life insurance has been taken into consideration for the period of 10 years commencing from 2013-14 to 2022-23, and to justify the study, the various statistical methods like coding, ranking, ratio analysis, and pooled regression analysis have been used. The study is an attempt to analyse the impact of risk disclosure on the financial performance of life insurance companies in India because in a sector where trust and financial stability are paramount, prioritising high-quality risk disclosures is crucial for the long-term success and resilience of life insurance companies in India. The findings of this study highlight that the effective risk management is crucial to uphold the life insurers’ financial stability, meet policyholders’ claims, and maintain solvency.

Keywords: Life Insurance Companies, Financial Performance, Risk Management and Risk Disclosure

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