Essays on Economic Trends, Systemic Shocks and Emerging Risks in the Insurance Industry

This dissertation explores how structural economic trends, systemic shocks, and the rise of new risks shape the performance and innovation dynamics of the insurance industry. The first essay investigates the determinants of investment performance and the level of current interest returns on traditional life insurance contracts in the German insurance market during the low-interest-rate phase. The results show that both investment performance and current interest returns are significantly influenced by the legal form of the insurance company and that a sustainable, competitive surplus participation for policyholders requires a robust investment performance. In contrast, heterogeneity factors play a rather subordinate role in determining the level of current interest returns on traditional life insurance policies. The second essay examines how the COVID-19 pandemic influenced the underwriting profitability of German property and casualty insurers, both overall and by line of business. The analysis reveals that premium volumes remained largely stable during the pandemic, whereas underwriting profitability increased, driven largely by a reduction in motor claims following lower traffic volumes and accident frequencies. Additional improvements were recorded in household contents and personal accident insurance, associated with declines in burglaries and injury-related events. The third essay explores the emergence and current developments of the still nascent cyber insurance-linked securities (Cyber-ILS) market. The results indicate that the market launch is primarily attributable to capacity shortages in the cyber reinsurance sector, rising reinsurance prices, improvements in cyber risk modeling, and enhanced cyber risk education among investors. Moreover, there is broad consensus among sponsors regarding the preferred short duration of Cyber-ILS instruments, whereas opinions diverge significantly on the structuring of triggers and the appropriate level of diversification. Overall, the three essays demonstrate the key success factors for the insurance industry under structural pressure, how it preserves stability amid external shocks, and how innovation emerges in response to new and evolving risks.