How Macroeconomic Shifts Drive Insurance Returns: Evidence from OECD Countries

Abstract

Insurers play a significant role in supporting financial stability by providing essential risk management solutions. However, their financial performance is highly susceptible to macroeconomic fluctuations due to their close links with financial markets and economic activity. This study investigates how macroeconomic shifts influence the return on assets of non-life insurance companies across OECD countries. Using a comprehensive dataset covering 38 nations from 2009 to 2022, a robust panel data analysis examines the effects of key economic indicators on insurance profitability. The results reveal that gross domestic product growth, industrial production, stock prices, and shortterm interest rates positively impact returns on assets, while inflation, long-term interest rates, and retail sales volume exert negative effects. These findings highlight the dual challenges faced by insurers: seizing opportunities during economic expansions and mitigating risks during periods of high inflation and financial uncertainty. The study further underscores the need for dynamic risk management strategies, diversified investment portfolios, and policy frameworks that support the industry’s resilience against macroeconomic shocks. By offering empirical evidence on the complex interplay between economic dynamics and insurance returns, this research provides valuable insights for insurers, investors, and policymakers seeking to navigate the evolving financial landscape and enhance the sector’s long-term sustainability. JEL Classification : G22 , E44 , G15

Keywords

• Macroeconomic factors
• insurance profitability
• financial stability
• non-life insurance
• panel data analysis

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