The Influence of The Financial Ratio of The Early Warning System and The Covid-19 Pandemic on The Solvency Level of Islamic General Insurance Companies in Indonesia

Abstract

The purpose of this study is to determine the effect of the liquidity ratio, claim expense ratio, own retention ratio, and the COVID-19 pandemic on the solvency level of Islamic general insurance companies, as proxied by risk-based capital (RBC). The sample for this study was Islamic general insurance companies that published financial statements for the 2019-2023 period. The sample size was 8 using a purposive sampling method. This study used a quantitative approach with descriptive analysis, static panel data regression, Chow test, Hausman test, and Lagrange multiplier test, processed using STATA software version 17. The results show that the liquidity ratio partially has a significant negative effect on solvency level, the claim expense ratio partially has no significant effect on solvency level, the own retention ratio partially has no significant effect on solvency level, and the COVID-19 pandemic partially has no significant effect on solvency level. Simultaneously, the liquidity ratio, claim expense ratio, own retention ratio, and the COVID-19 pandemic have a significant effect on solvency level. The results of the R2 coefficient value of 21.70% indicate that the liquidity ratio, claim burden ratio, own retention ratio and the Covid-19 pandemic are able to explain the dependent variable, namely the solvency level, by 21.70%.