عنوان مقاله [English]
Objective: Considering the covid-19 pandemic and its effect on economic relations, we need to study its risks on economic firms besides its direct cost on economy. Therefore, this paper investigates the impact of production shockof this pandemy on the insurance industry to liquidity shock.
Methodology: We first assume the shock enters through the product channel (based on observations) and transfers to the product cycle in the insurance industry and obtain the effect of production shock by extracting theoretical and long term premium relations with economic and calculate the coefficients with the help of the autoregressive model. Then, with respect to different scenarios for probable shocks, arising from credit risks and risk of price change as an outcome of the Corona pandemic (by means of relaxing productive liquidity through product reduction), we analyze insurers’ liquidity status both in normal and critical situations.
Findings: In the short-term and critical conditions, if the growth of global GDP decreases by 0.5% or 2.8%, then the decrease in liquidity would be 34.14 and 34.18, respectively. Furthermore, the decrease in the liquidity index in the long-term and critical conditions is equal to 33.07 and 33.12, respectively.
Conclusion: Insurance companies have to increase cash and assets with high liquidity within the short term to cover the aforementioned risk in critical conditions. Also, if the mentioned conditions continue in the long term, an increase in liquid assets in the form of gold or stable foreign currencies should be considered by insurance companies.
JEL Classification: I10, C23, G22.