Document Type : Original Research Paper
Authors
Department of Economics, University of Sistan and Baluchistan, Iran
Abstract
The Concentration Risk of the insurance companies is considered as special kinds of the market risks which the insurance company or an insurance industry faces with due to the concentration on a business line or a geographic region. The index of the concentration risk among the business lines of the insurance industry of Iran is calculated utilizing the data collected via the loss ratio and indices of concentration including Herfindhal-Hirschman index (HHI), Theil Entropy Index (TEI), Hannah-Kay Index (HKI), Hall-Tideman Index (HTI) and Gini Index (G) during 1979-2014. Granger Causality Test confirmed existing of a significant relationship between the time series of the loss ratio and calculated indices of the risk concentration during this period. The results indicated that the amount of the concentration of the insurance industry on the business lines will affect the loss ratio payment of the insurance industry. Therefore, according to the obtained results, the insurance industry or the insurance companies can decrease the loss ratio to a reasonable level by allocation of the resources level by allocation of the resources to different lines of business and geographical regions.
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