The Long-term Impact of Covid-19 on Insurance Industry: Evidence from Time Series Model

Abstract

The worldwide COVID-19 pandemic had a significant influence on the global financial market. As one of the most important compositions of the market, insurance industry, inevitably, was also influenced severely by such pandemic both in China and abroad. To study the impact of COIVD-19 on the profit of business insurance, the source of data and the methods utilized to estimate it, including Unit Root Test, VAR Model, and ARMA-GARCH Model were introduced in this paper. The analysis pointed out that two influences COVID-19 brought to the insurance field were opposite. First, the growing demand for business insurance benefited the insurance company. Nevertheless, the capital escaped from the financial market due to its tendency of avoiding risks, which led to the drastic diving of the market. In the short term, the disadvantage of the pandemic to the insurance industry overwhelmed the advantage. Nonetheless, the market will recover and return to normal in the long run.