Impact of Economic Indicators on Insurance Claim Frequency in Namibia

Abstract

Purpose: The aim of the study was to assess the impact of economic indicators on insurance claim frequency in Namibia.

Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.

Findings: The study indicated that economic indicators such as GDP growth, unemployment rates, and inflation rates play significant roles in shaping insurance claim frequencies across different sectors. Study shows that during periods of economic downturns characterized by higher unemployment and lower consumer spending, insurance claim frequencies tend to increase. This trend is particularly notable in sectors sensitive to economic cycles, such as property and casualty insurance, where economic instability can lead to higher incidences of claims related to property damage and liability. Conversely, during periods of economic expansion marked by robust GDP growth and low unemployment rates, insurance claim frequencies may stabilize or even decrease in some sectors. This pattern reflects improved consumer confidence and reduced financial strain on businesses, potentially lowering the incidence of claims for certain types of insurance coverage. However, the relationship between economic indicators and insurance claim frequency is nuanced and varies across different insurance lines and geographical regions.

Implications to Theory, Practice and Policy: Economic cycle theory, rational choice theory and prospect theory be used to anchor future studies on assessing the impact of economic indicators on insurance claim frequency in Namibia. In terms of practical implications, insurers are advised to adopt dynamic pricing models and underwriting strategies that can adapt to changing economic conditions. On the policy front, collaboration with regulatory bodies is essential to establish guidelines that promote transparency, fairness, and stability in insurance markets during economic fluctuations.