Equilibrium Relationship of Thai economic Effected Life Policy

Abstract

This research paper study to equilibrium relationship of Thai economy effecting the life insurance policies. This study is a document research to analyze of monthly policy data from January 2003 to December 2015. And to study the impact of Thai economy that effect to assurance business and the relationship of long run and short run of Thai economy effecting to assurance business. It is commercial study of important macro fundamentals.

There are 3 objectives of the study: 1) to study equilibrium relationship of long run of Thai economy effecting to the volume of policy in Thailand 2) to analyze the relationship between of assurance business and factors of economic environment by cointegration analysis and error correction model and 3) to study factors that stimulate customer behavior insurance.

The study found that equilibrium relationship of Thai economy effecting the volume of life insurance policy. The data used monthly from 5 dependent variables are GDP, CPI, PII, rate and unemployment. From the OLS estimation, it found that CPI and Pll non-effected to volume life policy. Therefore, the equilibrium relationship only GDP, rate and Unemployment was further tested. By using the ADF data stability test, it found that there were 2 variables that qualify as I(0): In(Total) and GDP. Qualifies as I (1) with 2 variables: rate and unemployment. The test of equilibrium relationship in long run, the method of Pesaran et al. (2001), which can be used with variables qualifies as I (0) or I (1). The results are the economic variables in (Total), GDP, rate and Unemployment had equilibrium relationship in long run. From estimating the equilibrium relationship in long run, it found that rate and unemployment were in accordance with the assumption. According to information of life insurance business, which has life insurance premium rates. As if the interest rates are higher than the rate of life insurance premiums. The insured may redeem the policy to invest in other financial products.  As for the unemployment rate of people; there is a lack of income and lack of liquidity in purchasing, effected to the purchase of life insurance is reduced. And the accuracy of gross domestic product (GDP) did not occur to the forecasting performance.