FACTORS AFFECTING PROFITABILITY OF NON-LIFE INSURANCE COMPANIES IN NEPAL
Date
2024
Authors
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Journal ISSN
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Publisher
Shanker Dev Campus
Abstract
The purpose of this research is to analyze the factors that determine the profitability of
life insurance firms in Nepal. The study places particular emphasis on important
financial indicators such as the solvency ratio, premium growth, company size, and
tangibility ratio. The study uses panel data techniques from eight different insurance
companies, as well as descriptive and causal analysis with SPSS 25.0 to analyze the
correlations between a variety of financial and macroeconomic aspects. The findings
indicate that there is a somewhat favorable link between the size of a firm and its
profitability (Return on Assets, or ROA), but the findings also show a negative
correlation between GDP and ROA. More specifically, research has shown that larger
organizations have higher levels of profitability, suggesting that economies of scale
play a significant role. Other factors, including the solvency ratio, premium increase,
and inflation, do not have a statistically significant influence on profitability,
according to the research findings. It is imperative that non-life insurance companies
continue to pursue premium growth plans and maintain solid solvency positions, as
the implications of these results highlight the significance of doing so. In addition, the
study recommends doing future research to investigate the causal links and other
elements that influence profitability. This would result in a deeper comprehension of
the non-life insurance business in Nepal. This study provides essential information for
industry stakeholders and regulators, which enables informed decision-making and
fosters sustainable development in the ever-changing environment of the insurance
business.