Development of E-Insurance Through Market Institutions: The Example of Digital Compulsory Third-Party Motor Insurance

Abstract

Electronic insurance is one of the most dynamic segments of the financial sector in various countries. E-commerce tools allow standardizing processes, reducing transaction costs and scaling up the provision of services. The authors of the paper investigate the possibility of improving the institutions of compulsory motor third-party liability insurance through the formation of e-insurance system on the example of Russia. The authors show that the formation of effective market institutions in the field of compulsory motor third-party liability insurance through e-insurance contributes to the solution of such problems as fraud, dishonesty, information asymmetry. The effective e-insurance system should take into account the variation in the road ecosystems of the country’s regions. The authors developed an econometric model of the average number of accidents dependence on various market institutions factors in the region based on a sociological study in the sector of compulsory motor third-party liability insurance. The results of the study show that an effective system of relevant e-insurance should take into account the variation in insurance rates and categories of drivers who differ in solvency, attitude to risk, age and driving experience, an acceptable level of insurance costs, etc. The authors propose that these and other important institutional features of regional road ecosystems should be taken into account when designing the functional capabilities of key elements of the electronic system of compulsory motor third-party liability insurance, which can be formed at the national level on the basis of market institutions.