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Published : 2025-02-17
Vol. 97 No. 4 (2024)

Identification of liquidity risk in the insurance activity

Hubert Grochowski



DOI: https://doi.org/10.26354/bb.2A.4.97.2024

Abstract

The aim of this article is to present the issues of defining liquidity risk and its subtypes, as well as to lay out an original approach to a comprehensive demonstration of the liquidity risk in the operations of an insurance company. A systematic arrangement of risks was presented, which can be a helpful tool in identical liquidity risk management processes in individual entities. Based on the presented analysis of the companies' practical approaches to risk management, several conclusions can be drawn. Firstly, there is a different approach to the taxonomy of liquidity risk, which can be created through the interpretation of legal norms and guidelines of supervisory authorities, and the practice of insurance companies presented in annual solvency and financial condition reports. Moreover, within insurance companies themselves there are different approaches to the problem of liquidity risk. In most cases, it does not go beyond noting the risk in an internal risk map and defining it in a way that is close to regulatory standards. The presented analyses should be continued in the future with research on methods for measuring and assessing liquidity risk in insurance companies.

Keywords:

insurance sector, liquidity, liquidity risk, liquidity management

JEL Codes

G22


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Grochowski, H. (2025). Identification of liquidity risk in the insurance activity. Safe Bank, 97(4), 22–50. https://doi.org/10.26354/bb.2A.4.97.2024

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