The short-run impact of COVID-19 on the activity in the insurance industry in the Republic of North Macedonia

The impacts of COVID-19 on China insurance industry-An empirical analysis based on event study

Introduction

At the end of 2019, the sudden outbreak of COVID-19 pneumonia has developed from a mass health event to a global epidemic disaster. Its impact extends from human health to social, economic, political, international relations and global governance. In the process of fighting against the epidemic in China, almost all economic sectors were affected, and the insurance industry with epidemic sensitive characteristics was particularly affected.

Methods

In order to identify the impacts of COVID-19 on China's insurance industry, this paper uses the event study method to calculate the changes in the cumulative abnormal return rate and the cumulative excess return of Chinese listed insurance companies before and after the outbreak of COVID-19. In the empirical analysis, five different typical events are examined, including the first outbreak of COVID-19 in China, the closure of Wuhan, the dredging of Wuhan, and the listing of vaccines in China.

Results

The results show that the return rate of listed companies in the insurance industry showed an "inverted N" curve with the "decreasing, rising and then decreasing." The epidemic mainly has negative effects on the insurance industry in terms of premium income and indemnity expenditure. According to the supply shock theory of the new supply economics, the epidemic has a negative impact on the insurance industry in the short term and a positive impact in the long term.

Discussion

In this context, insurance enterprises should attach importance to the change of business model, strengthen the development model of public-private joint venture insurance, promote product innovation and the application of insurance technology, and the experience and practice of the insurance industry in responding to the impact of the epidemic are of great significance to the transformation of China's insurance industry.

Impact of COVID-19 on insurance industry

The COVID-19 outbreak led to an unprecedented abrupt economic shock to many developing countries, among which was the Republic of North Macedonia. In order to reduce the impact of the disease spread, the government of North Macedonia implemented social distancing restrictions such a sclosure of schools, airports, borders, restaurants and shopping malls. In the most severe cases there were even lockdowns – the citizens of certain municipalities were prohibited from leaving theirhomes. This sub sequently led to a major economic down turn: stock market splummeted, inter- national trade slowed down, businesses went bankrupt and people were left unemployed. The resulting pandemic and the government actions taken inresponse, notably altered the social and economic activities under taken by the population (Stojkoski et al., 2020). In this paper we will try to find out impact of COVID-19 on Insurance Industry.