Assessment of the competitive environment of the health insurance market

Olga Kneysler,Lesia Shupa,Olha Kryvytska,Iryna Huzela

doi:10.21511/ppm.17(2).2019.42

Abstract

The main purpose of this investigation is to distinguish the problematic tendencies of the health insurance market development in Ukraine and the competitive positions of the leading insurance companies on it. Accordingly, the issues of complex analysis of key indicators of the insurers’ competitiveness, and the issues of establishing the factors that determine the level of competition in the market become very urgent. The first 30 insurers out of 50 were taken for the study, and they received about 90% of insurance premiums for voluntary health insurance in Ukraine in 2017. The authors have made the assessment of the competitive environment of the health insurance market of Ukraine using the concentration index and the indicator of market competition, which resulted in defining the advantages and disadvantages of their application. Taking into account that the abovementioned indicators for assessing the competition in the insurance market can provide only approximate results, which indicates the inadequacy of the conclusions about the effectiveness of business processes management on it, the authors offered a scientific methodological approach to assessing the market environment with the use of an integrated indicator of the voluntary health insurance market competitiveness. Herewith, such an integrated indicator is calculated in terms of three segments of the market: sickness insurance; voluntary medical insurance (continuous health insurance); medical expenses insurance, simultaneously taking into account the behavior of two indicators – concentration and market competition. As a result of the research, it was found that the highest level of market concentration is typical for sickness insurance and it indicates a high monopoly in the market in terms of this segment. Thus, the integrated indicator allows to make a comprehensive investigation of market behavior of the market participants and to reveal the problematic tendencies of its competitive environment.

Highlights

Competition in the health insurance market as an integral part of the market economy characterizes the process of interaction and struggle of the existing companies on it, potential partners and competitors, aimed at ensuring the most favorable position for the market participant, which will provide it with the opportunity to protect against the competitive forces or influence on them for its own benefit, will create better conditions for the realization of insurance services, satisfaction of the client’s needs and obtaining the economic remuneration
In order to assess the competitive environment of the health insurance market and increase the efficiency of business processes management on it, it is advisable to develop a scientific and methodological approach to assessing the market competition using an integrated indicator of the voluntary health insurance market competitiveness, the parameters of which can describe the competitive tendencies of the insurers who dominate on the market, the strategy of their market position and allow to use measures on adoption of reasonable decisions due to the regulation of the health insurance market development
While assessing the competitive environment of the Ukrainian voluntary health insurance market by using the generally accepted methodology for assessing market concentration and competition in the insurance market, it has been established that: the highest concentration level of the market can be seen in sickness insurance, and it indicates a high monopoly in the market of voluntary health insurance in terms of this segment; due to the segments of voluntary medical insurance and medical expenses insurance, the concentration level is lower, and its value is within the permissible limits of the competitive environment in accordance with the antitrust law

Summary

INTRODUCTION

Competition in the health insurance market as an integral part of the market economy characterizes the process of interaction and struggle of the existing companies on it, potential partners and competitors, aimed at ensuring the most favorable position for the market participant, which will provide it with the opportunity to protect against the competitive forces or influence on them for its own benefit, will create better conditions for the realization of insurance services, satisfaction of the client’s needs and obtaining the economic remuneration. Despite a significant number of insurers providing services for voluntary health insurance, it is not possible to consider the health insurance market to be competitive This is evidenced by a number of factors. In order to outline the competitive tendencies in the insurance sector, since 2003, the National Financial Services Commission has introduced a calculation of two competition indicators – the market concentration ratio and the Herfindahl-Hirschman Index. This is a positive aspect in the development of information provision of the insurance market that made it possible to assess the competitive behavior of its participants. In order to assess the competitive environment of the health insurance market and increase the efficiency of business processes management on it, it is advisable to develop a scientific and methodological approach to assessing the market competition using an integrated indicator of the voluntary health insurance market competitiveness, the parameters of which can describe the competitive tendencies of the insurers who dominate on the market, the strategy of their market position and allow to use measures on adoption of reasonable decisions due to the regulation of the health insurance market development

LITERATURE REVIEW

AIMS

METHODS

RESULTS

Findings

CONCLUSION