ICBI 2024
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Item How Does Firm Specific Risk Impact for the Firm Performance of Insurance Industry in Sri Lanka(Faculty of Commerce and Management Studies University of Kelaniya., 2024-11-01) Sooriyaarachchi, S.K.R.N.; Buddhika, H.J.R.Risks and uncertainties unique to the operations and functioning of insurance businesses are referred to as insurance-specific risks. Thus, using a sample size of 27 companies, the study examines how these insurance-specific risks affect profitability in Sri Lanka over an 11-year period (2012–2022). Insurance- specific risk for independent variables has been measured using three variables: reinsurance, technical provisions, and underwriting risks. Firm performance was assessed using the return on equity as the dependent variable. The Ex-Post Facto Research Design, on which the study is based, makes use of previously gathered data. Their yearly reports provided secondary data for the study. The fixed effect regression model's findings demonstrated that, whilst underwriting risk had a negative and negligible effect on return on equity, technical provision risk and reinsurance risk had a negative and significant influence. According to the study's findings, the insurance companies listed in Sri Lanka will become less profitable as reinsurance and technical provision risks rise. According to the study, insurance companies in Sri Lanka should adequately account for unpaid claims by evaluating their liabilities and considering their experience in order to create a thorough process for efficiently tracking and managing their unpaid claims. Additionally, Sri Lankan listed insurance companies will take into account their risk retention ratios and reinsurance policies. Listed insurance companies must also improve their capacity to pay the majority of claims on their own.