# Determinants of Sustainable Profitability of the Serbian Insurance Industry: Panel Data Investigation

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## Abstract

**:**

## 1. Introduction

**Hypothesis**

**1**

**(H1).**

**Hypothesis**

**2**

**(H2).**

**Hypothesis**

**3**

**(H3).**

## 2. Literature Overview

## 3. Material and Methods

**Model 1.**

**Model 2.**

## 4. Results and Discussion

## 5. Strategy for Sustainable Insurance in Serbia: A Proposal

## 6. Conclusions

## Author Contributions

## Funding

## Institutional Review Board Statement

## Informed Consent Statement

## Data Availability Statement

## Conflicts of Interest

## Appendix A

ROA | ROTP | SIZE | RISK | HHI | GDP | INFL | WAGE | POPUL | LEXP | REG | STAB | |
---|---|---|---|---|---|---|---|---|---|---|---|---|

Mean | 2.17 | 3.43 | 12.55 | 7.46 | 1285.0 | 4.12 | 6.37 | 666.12 | 7,204,794 | 74.78 | 52.52 | 40.41 |

Median | 2.44 | 3.99 | 14.63 | 6.00 | 1259.5 | 4.11 | 7.30 | 653.20 | 7,199,077 | 74.80 | 53.10 | 38.90 |

Maximum | 5.18 | 7.62 | 14.94 | 18.99 | 1637.2 | 4.14 | 12.40 | 819.60 | 7,350,222 | 75.50 | 57.20 | 55.20 |

Minimum | 0.08 | 0.15 | 8.14 | 0.19 | 1112.7 | 4.10 | 1.10 | 561.90 | 7,057,412 | 73.90 | 45.60 | 27.40 |

Std. Dev. | 1.55 | 2.39 | 3.06 | 6.61 | 156.19 | 0.01 | 3.89 | 76.87 | 96,828.27 | 0.60 | 3.27 | 9.68 |

Jarque–Bera | 4.92 | 7.77 | 28.41 | 13.33 | 26.81 | 6.55 | 10.58 | 6.38 | 11.33 | 16.13 | 11.62 | 13.15 |

Probability | 0.09 | 0.02 | 0.00 | 0.00 | 0.00 | 0.04 | 0.01 | 0.04 | 0.00 | 0.00 | 0.00 | 0.00 |

Observations | 216 | 216 | 216 | 216 | 216 | 216 | 216 | 216 | 216 | 216 | 216 | 216 |

**Source:**Authors.

ROA | ROTP | SIZE | RISK | HHI | GDP | INFL | WAGE | POPUL | LEXP | REG | STAB | |
---|---|---|---|---|---|---|---|---|---|---|---|---|

ROA | 1.00 | |||||||||||

ROTP | 0.99 * | 1.00 | ||||||||||

SIZE | 0.06 * | 0.07 * | 1.00 | |||||||||

RISK | −0.05 * | −0.04 * | 0.46 * | 1.00 | ||||||||

HHI | 0.01 * | −0.01 | 0.31 | 0.46 | 1.00 | |||||||

GDP | 0.31 * | 0.35 * | 0.38 * | 0.39 * | 0.50 | 1.00 | ||||||

INFL | −0.05 * | −0.05 * | 0.49 * | 0.51 * | 0.46 * | 0.43 * | 1.00 | |||||

WAGE | −0.34 | −0.36 | −0.08 | 0.05 | 0.34 * | 0.68 * | 0.68 * | 1.00 | ||||

POPUL | 0.21 * | 0.22 * | −0.12 * | −0.21 * | −0.53 | 0.45 * | −0.23 | −0.70 * | 1.00 | |||

LEXP | −0.80 | −0.81 * | 0.30 * | 0.45 | 0.26 * | 0.21 | 0.18 | 0.21 * | 0.06 | 1.00 | ||

REG | −0.18 | −0.14 | −0.40 | −0.49 * | −0.41 * | −0.60 | −0.43 * | −0.40 | 0.44 | 0.00 * | 1.00 | |

STAB | −0.34 * | −0.33 | −0.64 | −0.52 * | −0.22 | −0.41 * | −0.15 * | 0.15 * | −0.12 | 0.32 | 0.57 * | 1.00 |

**Source:**Authors. * Statistically significant at 5%.

Level | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|

ROA | ROE | ROTP | SIZE | RISK | HHI | GDP | INFL | WAGE | ||||||||||

TEST | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * |

Test 1 | −10.9 | 0.00 | −1.7 | 0.04 | −5.0 | 0.00 | 1.8 | 0.96 | −1.38 | 0.08 | −3.13 | 0.00 | 6.52 | 1.00 | 0.76 | 0.78 | −2.06 | 0.02 |

Test 2 | −3.5 | 0.00 | −1.7 | 0.04 | −2.5 | 0.01 | 3.0 | 1.00 | 0.24 | 0.60 | 0.58 | 0.72 | 5.03 | 1.00 | 3.36 | 1.00 | −0.13 | 0.45 |

Test 3 | 77.8 | 0.00 | 64.5 | 0.00 | 67.8 | 0.00 | 6.4 | 1.00 | 25.04 | 0.91 | 21.45 | 0.97 | 2.00 | 1.00 | 5.42 | 1.00 | 29.32 | 0.78 |

Test 4 | 98.3 | 0.00 | 108.0 | 0.00 | 100.0 | 0.00 | 7.6 | 1.00 | 20.14 | 0.98 | 83.76 | 0.00 | 0.69 | 1.00 | 20.76 | 0.98 | 81.65 | 0.00 |

Level (Continued) | ||||||||||||||||||

POPUL | LIFEEXP | REG | STABILITY | Explanation | ||||||||||||||

TEST | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Variable | Description | Variable | Description | ||||||

Test 1 | −2.32 | 0.01 | −8.45 | 0.00 | −7.28 | 0.00 | −6.81 | 0.00 | ROA, ROE, ROTP | Stationary | POPUL | Non-stationary | ||||||

Test 2 | 3.23 | 1.00 | −0.32 | 0.38 | −1.15 | 0.12 | 0.19 | 0.58 | SIZE, RISK, HHI | Non-stationary | LIFEEXP | Non-stationary | ||||||

Test 3 | 5.82 | 1.00 | 31.54 | 0.68 | 42.64 | 0.21 | 25.59 | 0.90 | GDP, INFL | Non-stationary | REG | Non-stationary | ||||||

Test 4 | 1.34 | 1.00 | 12.58 | 1.00 | 142.6 | 0.00 | 17.24 | 1.00 | WAGE, SAVING | Non-stationary | STABILITY | Non-stationary | ||||||

First-Difference | ||||||||||||||||||

SIZE | RISK | HHI | GDP | INFL | WAGE | POPUL | LIFEEXP | REG | ||||||||||

TEST | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * | Stat. | P * |

Test 1 | −6.00 | 0.00 | −5.91 | 0.00 | −24.0 | 0.00 | −10.6 | 0.00 | −2.59 | 0.00 | −12.5 | 0.00 | −13.3 | 0.00 | −2.86 | 0.00 | −36.6 | 0.00 |

Test 2 | −2.75 | 0.00 | −0.14 | 0.44 | −8.10 | 0.00 | −6.38 | 0.00 | −3.10 | 0.00 | −4.10 | 0.00 | −3.74 | 0.00 | 0.51 | 0.69 | −13.3 | 0.00 |

Test 3 | 69.40 | 0.00 | −6.67 | 0.00 | 143.8 | 0.00 | 120.8 | 0.00 | 48.90 | 0.07 | 88.51 | 0.00 | 83.02 | 0.00 | −2.95 | 0.00 | 203.5 | 0.00 |

Test 4 | 93.53 | 0.00 | 58.95 | 0.01 | 120.1 | 0.00 | 221.7 | 0.00 | 127.4 | 0.00 | 128.1 | 0.00 | 148.7 | 0.00 | 127.3 | 0.00 | 13.83 | 1.00 |

First-Difference (Continued) | ||||||||||||||||||

STABILITY | Explanation | |||||||||||||||||

TEST | Stat. | P * | Variable | Description | Variable | Description | Variable | Description | Explanation | |||||||||

Test 1 | −7.81 | 0.00 | SIZE | Stationary | INFL | Stationary | LIFEEXP | Stationary | All the variables are stationary at first-difference | |||||||||

Test 2 | −4.93 | 0.00 | RISK | Stationary | WAGE | Stationary | REG | Stationary | ||||||||||

Test 3 | 100.5 | 0.00 | HHI | Stationary | SAVING | Stationary | STABILITY | Stationary | ||||||||||

Test 4 | 1.84 | 1.00 | GDP | Stationary | POPUL | Stationary | -------------------- | ------------------ |

**Source:**Authors. * Probabilities for Fisher tests are computed using an asymptotic chi-square distribution. All other tests assume asymptotic normality. Test 1: Levin, Lin, and Chu test. Test 2: Im, Pesaran, and Shin W-stat. Test 3: ADF—Fisher chi-square. Test 4: PP—Fisher chi-square.

Model 1: ROA | |||
---|---|---|---|

Lagrange Multiplier Test (Random Effects vs. POLS) | |||

Normal | df. | p-value | Winner |

2.7952 | ---------------------------- | 0.002594 | Random Effects |

Alternative hypothesis: significant effects | |||

F test for individual effects (Fixed Effects vs. POLS) | |||

F-value | df1/df2 | p-value | Winner |

1.0389 | 17/119 | 0.4223 | POLS |

Alternative hypothesis: significant effects | |||

Hausman test (Fixed effects vs. Random effects) | |||

Chi-squared | df | p-value | Winner |

9.5317 | 7 | 0.2167 | Random Effects |

Alternative hypothesis: one model is inconsistent | |||

Model 2: ROTP | |||

Lagrange Multiplier Test (Random effects vs. POLS) | |||

Normal | df. | p-value | Winner |

5.5155 | ---------------------------- | 1.739 × 10^{−8} | Random Effects |

Alternative hypothesis: significant effects | |||

F test for individual effects (Fixed effects vs. POLS) | |||

F-value | df1/df2 | p-value | Winner |

−0.55819 | 17/119 | 0.9999 | POLS |

Alternative hypothesis: significant effects | |||

Hausman test (Fixed effects vs. Random effects) | |||

Chi-squared | df | p-value | Winner |

10.8214 | 7 | 0.1466 | Random Effects |

Alternative hypothesis: one model is inconsistent |

**Source:**Authors.

**Table A5.**Mixed-effects model $\left(\mathrm{Model}\text{}4:{\text{}\mathsf{\beta}}_{\mathrm{BS}}\ne {\mathsf{\beta}}_{\mathrm{WS}}\right)$.

Panel A: ROA | Panel B: ROTP | ||||
---|---|---|---|---|---|

Variable | Coefficient | Prob. | Variable | Coefficient | Prob. |

TIME | 0.003 | 0.000 *** | TIME | 0.004 | 0.000 *** |

${\mathrm{SIZE}}_{\mathrm{BS}}$ | 0.744 | 0.003 ** | ${\mathrm{SIZE}}_{\mathrm{BS}}$ | 0.852 | 0.012 ** |

${\mathrm{SIZE}}_{\mathrm{WS}}$ | −0.015 | 0.010 ** | ${\mathrm{SIZE}}_{\mathrm{WS}}$ | −0.183 | 0.005 *** |

${\mathrm{RISK}}_{\mathrm{BS}}$ | −0.212 | 0.015 ** | ${\mathrm{RISK}}_{\mathrm{BS}}$ | −0.354 | 0.013 *** |

${\mathrm{RISK}}_{\mathrm{WS}}$ | 0.006 | 0.025 ** | ${\mathrm{RISK}}_{\mathrm{WS}}$ | 0.131 | 0.041 ** |

${\mathrm{DUMMY}}_{\mathrm{BS}}$ | ---- | ---- | ${\mathrm{DUMMY}}_{\mathrm{BS}}$ | ---- | ---- |

${\mathrm{DUMMY}}_{\mathrm{WS}}$ | 1.231 | 0.006 *** | ${\mathrm{DUMMY}}_{\mathrm{WS}}$ | 1.012 | 0.000 *** |

${\mathrm{HHI}}_{\mathrm{BS}}$ | −0.155 | 0.001 ** | ${\mathrm{HHI}}_{\mathrm{BS}}$ | −0.422 | 0.014 ** |

${\mathrm{HHI}}_{\mathrm{WS}}$ | 0.088 | 0.044 ** | ${\mathrm{HHI}}_{\mathrm{WS}}$ | 0.104 | 0.038 ** |

${\mathrm{GDP}}_{\mathrm{BS}}$ | 0.312 | 0.022 ** | ${\mathrm{GDP}}_{\mathrm{BS}}$ | 0.139 | 0.002*** |

${\mathrm{GDP}}_{\mathrm{WS}}$ | 0.123 | 0.001 *** | ${\mathrm{GDP}}_{\mathrm{WS}}$ | 0.157 | 0.000 *** |

${\mathrm{INFL}}_{\mathrm{BS}}$ | −0.201 | 0.024 ** | ${\mathrm{INFL}}_{\mathrm{BS}}$ | −0.137 | 0.029 ** |

${\mathrm{INFL}}_{\mathrm{WS}}$ | 0.114 | 0.000 * | ${\mathrm{INFL}}_{\mathrm{WS}}$ | 0.044 | 0.036 ** |

${\mathrm{WAGE}}_{\mathrm{BS}}$ | 1.166 | 0.329 | ${\mathrm{WAGE}}_{\mathrm{BS}}$ | 0.946 | 0.221 |

${\mathrm{WAGE}}_{\mathrm{WS}}$ | −0.068 | 0.185 | ${\mathrm{WAGE}}_{\mathrm{WS}}$ | 0.458 | 0.197 |

${\mathrm{POPUL}}_{\mathrm{BS}}$ | 0.559 | 0.041 *** | ${\mathrm{POPUL}}_{\mathrm{BS}}$ | 0.321 | 0.000 *** |

${\mathrm{POPUL}}_{\mathrm{WS}}$ | −0.148 | 0.002 ** | ${\mathrm{POPUL}}_{\mathrm{WS}}$ | −0.133 | 0.033 ** |

${\mathrm{LEXP}}_{\mathrm{BS}}$ | −0.203 | 0.299 | ${\mathrm{LEXP}}_{\mathrm{BS}}$ | −0.428 | 0.233 |

${\mathrm{LEXP}}_{\mathrm{WS}}$ | −0.137 | 0.111 | ${\mathrm{LEXP}}_{\mathrm{WS}}$ | 0.137 | 0.176 |

${\mathrm{REG}}_{\mathrm{BS}}$ | −0.744 | 0.477 | ${\mathrm{REG}}_{\mathrm{BS}}$ | −0.422 | 0.109 |

${\mathrm{REG}}_{\mathrm{WS}}$ | 0.228 | 0.256 | ${\mathrm{REG}}_{\mathrm{WS}}$ | −0.218 | 0.424 |

${\mathrm{STAB}}_{\mathrm{BS}}$ | 0.592 | 0.007 ** | ${\mathrm{STAB}}_{\mathrm{BS}}$ | 0.455 | 0.003 *** |

${\mathrm{STAB}}_{\mathrm{WS}}$ | −0.255 | 0.000 * | ${\mathrm{STAB}}_{\mathrm{WS}}$ | −0.185 | 0.002 *** |

R-squared | 0.211 | R-squared | 0.244 | ||

Adj. R-sq | 0.203 | Adj. R-sq | 0.236 | ||

S.E. Reg. | 1.277 | S.E. Reg. | 1.133 | ||

B-P LM test * | 11.6621 (p = 0.2267) | 9.1844 (p = 0.1791) | |||

Pesaran CD * | 1.2021 (p = 0.3869) | 1.5685 (p = 0.4452) | |||

B-G/W test * | 17.8435 (p = 0.2755) | 19.2701 (p = 0.2849) | |||

B-P heter. * | 1.8642 (p = 0.2691) | 1.6481 (p = 0.3193) |

Dependent Variable: ROA | Dependent Variable: ROTP | ||||||||
---|---|---|---|---|---|---|---|---|---|

Panel A: FD GMM | Panel B: System GMM | Panel C: FD GMM | Panel D: System GMM | ||||||

Variable | Coefficient | Std. Err. | Coefficient | Std. Err. | Variable | Coefficient | Std. Err. | Coefficient | Std. Err. |

c | 1.3354 | 1.1501 | 0.7632 | 0.5311 | c | 1.2133 | 0.9431 | 0.8644 | 0.6466 |

$\Delta \mathrm{ROA}\left(\mathrm{lagged}\right)$ | 0.0506 | 0.0082 *** | 0.0829 | 0.0060 *** | $\Delta \mathrm{ROTP}\left(\mathrm{lagged}\right)$ | 0.1284 | 0.0269 *** | 0.1012 | 0.0483 ** |

SIZE | 0.1130 | 0.0184 *** | 0.1554 | 0.0460 *** | SIZE | 0.0985 | 0.0461 ** | 0.1843 | 0.0736 ** |

RISK | −0.1125 | 0.0480 ** | −0.1847 | 0.0563 *** | RISK | −0.1065 | 0.0342 *** | −0.1598 | 0.0513 ** |

DUMMY | 0.0312 | 0.63612 | 0.0519 | 0.1842 | DUMMY | 0.0166 | 0.0614 | 0.0222 | 0.0503 |

HHI | −0.0901 | 0.1202 | −0.0231 | 0.0555 | HHI | −0.0808 | 0.1263 | −0.0122 | 0.0189 |

GDP | 0.09338 | 0.0072 *** | 0.05881 | 0.00131 *** | GDP | 0.0838 | 0.0152 *** | 0.0509 | 0.0211 *** |

INFL | 0.0391 | 0.0131 | 0.0601 | 0.4747 | INFL | 0.0238 | 0.0141 * | 0.0509 | 0.0365 |

WAGE | 0.0211 | 0.01361 | 0.0757 | 0.0494 | WAGE | 0.0476 | 0.0729 | 0.0159 | 0.0136 |

POPUL | 0.2759 | 0.0605 *** | 0.1566 | 0.0237 *** | POPUL | 0.1621 | 0.0366 *** | 0.0856 | 0.0297 |

LEXP | 0.2963 | 0.5758 | 0.0587 | 0.13759 | LEXP | 0.2451 | 0.2041 | 0.0638 | 0.0437 |

REG | 0.0231 | 0.0125 * | 0.0305 | 0.1642 | REG | 0.0977 | 0.1310 | 0.1183 | 0.1498 |

STAB | 0.1108 | 0.0478 ** | 0.0658 | 0.0051 *** | STAB | 0.1456 | 0.0251 *** | 0.0712 | 0.0311 ** |

Adj. R-sq | 0.1203 | 0.1444 | Adj. R-sq | 0.0821 | 0.1033 | ||||

S.E. Reg. | 0.1928 | 0.2451 | S.E. Reg. | 0.1331 | 0.1567 | ||||

J-stat (Prob.) | 15.2153 (0.1942) | 29.4624 (0.1152) | J-stat (Prob.) | 13.2153 (0.2166) | 27.4481 (0.0922) | ||||

A-B (1) z-st (Prob.) | −5.3351 (0.0000) | −3.3956 (0.0000) | A-B (1) z-st (Prob.) | −4.6822 (0.0000) | −3.1145 (0.0000) | ||||

A-B (2) z-st (Prob.) | −0.3428 (0.7344) | −0.4867 (0.5211) | A-B (2) z-st (Prob.) | −0.4921 (0.5466) | −0.6288 (0.3787) |

**Source:**Authors. Note: Significance at the 10%, 5%, and 1% level are denoted by ***, **, *, respectively.

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Variable | Mark | Calculation | Relationship |
---|---|---|---|

Return on Asset | ROA | Net-profit/Total Asset | Dependent |

Return on Total Premium | ROTP | Net-profit/Total Premium | Dependent |

Size | SIZE | Log (Total Asset) | + |

Risk Exposure | RISK | Technical Reserves/Total Premium | − |

Specialization | DUMMY | 1 for life and 0 for non-life insurance | + |

Herfindahl-Hirschman index | HHI | Sum of squared market shares of all firms | + |

GDP | GDP | Log of GDP per capita | + |

Inflation | INFL | Growth rate of CPI | ± |

Wage | WAGE | Log of gross average monthly wages | + |

Population | POPUL | Population in Serbia | + |

Life expectancy at birth | LEXP | Log of life expectancy at birth, total (years) | − |

Quality of Regulation | REG | Log of percentile Rank | + |

Political Stability | STAB | Log of percentile Rank | + |

**Source**: Authors.

Variable | ${\mathbf{R}}_{\mathbf{j}}^{2}$ | $\mathbf{V}\mathbf{I}{\mathbf{F}}_{\mathbf{j}}$ | Tolerance | Description |
---|---|---|---|---|

SIZE | 0.1914 | 1.2367 | 0.8086 | No multicollinearity |

RISK | 0.5395 | 2.1718 | 0.4605 | No multicollinearity |

DUMMY | 0.3477 | 1.5331 | 0.6523 | No multicollinearity |

HHI | 0.5389 | 2.1688 | 0.4611 | No multicollinearity |

GDP | 0.1968 | 1.2450 | 0.8032 | No multicollinearity |

INFL | 0.2690 | 1.3681 | 0.7310 | No multicollinearity |

WAGE | 0.5475 | 2.2102 | 0.4525 | No multicollinearity |

POPUL | 0.1566 | 1.1857 | 0.8434 | No multicollinearity |

LEXP | 0.2657 | 1.3619 | 0.7343 | No multicollinearity |

REGULATION | 0.5267 | 2.1127 | 0.4733 | No multicollinearity |

STABILITY | 0.6418 | 2.7919 | 0.3582 | No multicollinearity |

**Source**: Authors.

POLS | Fixed Effects | Random Effects | ||||
---|---|---|---|---|---|---|

Variable | Coeffic | Prob. | Coeffic | Prob. | Coefficient | Prob. |

SIZE | 1.185 | 0.015 ** | 1.119 | 0.016 ** | 0.795 | 0.000 *** |

RISK | −0.260 | 0.048 ** | −0.288 | 0.035 ** | −0.196 | 0.002 *** |

DUMMY | 3.217 | 0.001 *** | 2.602 | 0.000 *** | 1.956 | 0.005 *** |

HHI | 0.320 | 0.333 | 0.255 | 0.329 | 0.224 | 0.344 |

GDP | 0.990 | 0.037 ** | 0.783 | 0.011 ** | 0.856 | 0.000 *** |

INFL | −0.031 | 0.113 | −0.012 | 0.101 | −0.048 | 0.216 |

WAGE | 0.311 | 0.095 * | 0.246 | 0.145 | 0.611 | 0.256 |

POPUL | 0.024 | 0.002 *** | 0.016 | 0.004 *** | 0.018 | 0.000 *** |

LEXP | −1.167 | 0.241 | −1.372 | 0.141 | −1.644 | 0.429 |

REG | −0.311 | 0.113 | −0.443 | 0.221 | −0.606 | 0.519 |

STAB | 0.393 | 0.059 * | 0.190 | 0.040 ** | 0.218 | 0.037 ** |

R-sq | 0.287 | 0.214 | 0.332 | |||

Adj. R-sq | 0.261 | 0.186 | 0.308 | |||

S.E. Reg. | 1.395 | 1.464 | 1.350 | |||

B-P LM test * | 18.4422 (p = 0.1577) | 16.3341 (p = 0.2216) | 14.3621 (p = 0.2764) | |||

Pesaran CD * | 1.4672 (p = 0.4265) | 1.6431 (p = 0.4503) | 1.9441 (p = 0.4744) | |||

B-G/W test * | 15.3562 (p = 0.1245) | 11.3562 (p = 0.2491) | 12.4791 (p = 0.1922) | |||

B-P heter * | 4.1742 (p = 0.2361) | 3.2944 (p = 0.2865) | 4.8573 (p = 0.1855) |

POLS | Fixed Effects | Random Effects | ||||
---|---|---|---|---|---|---|

Variable | Coefficient | Prob. | Coefficient | Prob. | Coefficient | Prob. |

SIZE | 1.668 | 0.005 *** | 1.499 | 0.015 ** | 1.584 | 0.010 *** |

RISK | −0.236 | 0.016 ** | −0.414 | 0.034 ** | −0.515 | 0.000 *** |

DUMMY | 1.678 | 0.018 ** | 1.455 | 0.009 *** | 1.331 | 0.001 *** |

HHI | 0.019 | 0.464 | 0.211 | 0.511 | 0.331 | 0.499 |

GDP | 0.269 | 0.001 *** | 0.220 | 0.022 ** | 0.335 | 0.043 ** |

INFL | −0.080 | 0.058 * | −0.072 | 0.077 * | 0.069 | 0.055 * |

WAGE | 1.507 | 0.134 | 1.258 | 0.211 | 1.606 | 0.111 |

POPUL | 0.447 | 0.000 *** | 0.616 | 0.001 *** | 0.595 | 0.000 *** |

LEXP | −0.583 | 0.561 | −0.614 | 0.540 | −0.4663 | 0.6417 |

REG | −0.894 | 0.235 | −0.829 | 0.409 | −0.831 | 0.273 |

STAB | 0.249 | 0.024 ** | 0.328 | 0.032 ** | 0.159 | 0.043 ** |

R-squared | 0.321 | 0.298 | 0.334 | |||

Adj. R-sq | 0.302 | 0.278 | 0.315 | |||

S.E. Reg. | 1.876 | 1.662 | 1.592 | |||

B-P LM test * | 12.4422 (p = 0.1254) | 14.3341 (p = 0.1843) | 10.3621 (p = 0.0891) | |||

Pesaran CD * | 2.5461 (p = 0.4953) | 2.1001 (p = 0.4821) | 2.3566 (p = 0.4906) | |||

B-G/W test * | 19.3562 (p = 0.3964) | 14.2255 (p = 0.3188) | 11.4791 (p = 0.1733) | |||

B-P heter * | 2.1742 (p = 0.3256) | 2.1990 (p = 0.2711) | 2.9244 (p = 0.2201) |

**Table 5.**Mixed-effects model $\left(\mathrm{Model}\text{}3:{\text{}\mathsf{\beta}}_{\mathrm{BS}}={\mathsf{\beta}}_{\mathrm{WS}}\right)$.

Panel A: ROA | Panel B: ROTP | ||||
---|---|---|---|---|---|

Variable | Coefficient | Prob. | Variable | Coefficient | Prob. |

TIME | 0.016 | 0.001 *** | TIME | 0.020 | 0.002 * |

SIZE | 0.983 | 0.000 ** | SIZE | 0.752 | 0.005 *** |

RISK | −0.185 | 0.004 ** | RISK | −0.222 | 0.001 *** |

DUMMY | 1.231 | 0.006 *** | DUMMY | 1.012 | 0.000 *** |

HHI | −0.132 | 0.011 ** | HHI | −0.331 | 0.013 ** |

GDP | 0.422 | 0.046 ** | GDP | 0.224 | 0.021 ** |

INFL | −0.104 | 0.017 ** | INFL | −0.081 | 0.045 ** |

WAGE | 1.471 | 0.222 | WAGE | 1.127 | 0.346 |

POPUL | 0.396 | 0.001 *** | POPUL | 0.291 | 0.004 *** |

LEXP | −0.339 | 0.149 | LEXP | −0.368 | 0.414 |

REG | −0.566 | 0.292 | REG | −0.655 | 0.301 |

STAB | 0.313 | 0.016 ** | STAB | 0.257 | 0.023 ** |

R-squared | 0.274 | R-squared | 0.294 | ||

Adj. R-sq | 0.251 | Adj. R-sq | 0.277 | ||

S.E. Reg. | 1.452 | S.E. Reg. | 1.261 | ||

B-P LM test * | 21.4422 (p = 0.4722) | 16.3677 (p = 0.3479) | |||

Pesaran CD * | 1.6901 (p = 0.4916) | 2.4933 (p = 0.4936) | |||

B-G/W test * | 9.8835 (p = 0.1244) | 12.5431 (p = 0.1922) | |||

B-P heter * | 2.5531 (p = 0.1866) | 1.9943 (p = 0.2541) |

Clarify definition and strategy | What do insurers mean by “sustainability” in practical terms? How are sustainability leaders expect to achieve their mission? |

Moving beyond the “goodnes phase” | Many people think on sustainability as voluntarism, philantropy, and good corporate citizenship. How can CSO convince business leaders to treat ESG considerations as part of the core business strategy? |

Establish more definitive metrics | What criteria are used to judge ESG progress and success? What performance benchmarks could be used to connect ESG efforts to top-line and bottom-line ROI. |

Bolster CSO resources | At most insurers, sustainability is a big job entrusted to a small team. If sustainability leaders had more resources, they could pursue more impactfull internal incentives to alter products, services, investments and operating models and expand their influence with policyholders and policymakers. |

Spend more time on transforming then reporting | Most insurer CSO spend nearly of all their time gathering information for the company’s annual ESG report, responding to independent ESG assesment firms and analysts and briefing key investors. The results are often as almost on exclusive focus on compliance and communication rather than transformation initiatives. |

**Source:**Modified according to Deloitte Insights [40].

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## Share and Cite

**MDPI and ACS Style**

Vojinović, Ž.; Milutinović, S.; Sertić, D.; Leković, B.
Determinants of Sustainable Profitability of the Serbian Insurance Industry: Panel Data Investigation. *Sustainability* **2022**, *14*, 5190.
https://doi.org/10.3390/su14095190

**AMA Style**

Vojinović Ž, Milutinović S, Sertić D, Leković B.
Determinants of Sustainable Profitability of the Serbian Insurance Industry: Panel Data Investigation. *Sustainability*. 2022; 14(9):5190.
https://doi.org/10.3390/su14095190

**Chicago/Turabian Style**

Vojinović, Željko, Sunčica Milutinović, Dario Sertić, and Bojan Leković.
2022. "Determinants of Sustainable Profitability of the Serbian Insurance Industry: Panel Data Investigation" *Sustainability* 14, no. 9: 5190.
https://doi.org/10.3390/su14095190