Simplex representation of insurance performance analysis

Sai Ranjani Bharathkumar and Santanu Gupta

Journal of Policy Modeling, 2020, vol. 42, issue 2, 419-436

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.

Keywords: Underwriting; Investment; Reinsurance; Simplex representation; Performance (search for similar items in EconPapers)
JEL-codes: C02 G22 H89 N25 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:42:y:2020:i:2:p:419-436

DOI: 10.1016/j.jpolmod.2019.06.010

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