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The short‐run impact of COVID‐19 on the activity in the insurance industry in the Republic of North Macedonia
Author(s) -
Stojkoski Viktor,
Jolakoski Petar,
Ivanovski Igor
Publication year - 2021
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/rmir.12187
Subject(s) - euros , insurance industry , business , pandemic , covid-19 , agency (philosophy) , economics , actuarial science , medicine , disease , infectious disease (medical specialty) , philosophy , epistemology , pathology , humanities
Recent studies suggest that the COVID‐19 pandemic will induce drastic changes in the business models of the insurance industry. However, despite an abundance of predictions, the literature still lacks empirical investigations of the impact of the pandemic. In this paper, we perform a first of a kind analysis and investigate the short‐run impact of COVID‐19 on the activity in the insurance in one country—North Macedonia. By utilizing a seasonal autoregressive model, we find that during the first half of 2020, the activity in the insurance industry shrank by more than 10% to what was expected. The total loss in the industry amounted to approximately 8.2 million euros. This was much less than the volume of reserves that the Insurance Supervision Agency made available as funds for dealing with the potential crisis. In addition, the pandemic induced changes in the insurance activity structure—the share of motor vehicles class in the total industry activity fell at the expense of the property classes. Our results suggest that the insurance industry in North Macedonia was well prepared to tackle the consequences of the pandemic and that automatic stabilizers had a major influence on weakening the overall negative impact.