Determinants of insurance firms' profitability in Malaysia/ Siti Suriani Abd Karim

Will you be able to survive later if you wake up with a house burning and all of your important things were destroyed? This is why insurance is important to everyone because any kind of risks can happen anytime to anyone. Therefore, Insurance is defined as a contract between the insurers and insured whereby the insurer have to pay the insured a claims, on the happening of a certain event or compensate the actual loss when it takes place, due to the risk insured. In Malaysia specifically, there are three types of insurance policies which are life insurance, general insurance and life and general insurance. Referring to the literature, most of the studies were conducted associates with banking sectors yet only a few studies on the insurance sector. In addition, only a few researches had done on the profitability determinants of insurance firms in developing countries like Malaysia. There are four internal factors that will be considered as the independent variables such as firm's size, liquidity ratio, leverage ratio and loss ratio. Meanwhile, return on assets (ROA) is used as the dependent variable to determine the profitability of insurance firms. This study will conduct a multiple regression model and it will only select a sample of total local ownership of insurance companies that are listed in the board of Bank Negara Malaysia. There are a total of 13 insurance companies that are owned by locals but only 10 that were chosen because it has a complete data from year 2011 until 2016. Hence, the purpose of this paper is to study the determinants of insurance firms in Malaysia.