Emerging Technologies in the Insurance Market

Insurance Premium Pricing and Ratemaking in Competitive Insurance and Capital Asset Markets

Since the insurance sector is of great importance for economic stability and financial support of citizens and businesses, the issue of regulation of the insurance market remains relevant. Research in this field can focus on various aspects of regulation, such as setting financial soundness standards for insurance companies, consumer protection, risk resolution mechanisms, risks and ensuring market stability. Research may include an analysis of the effectiveness of existing regulatory mechanisms, an assessment of their impact on the development of insurance markets and the ability to ensure the protection of the interests of all stakeholders. Given the rapid changes in business and technology, continuous monitoring and analysis of regulatory approaches is a key challenge to ensure the stability and efficiency of insurance markets. Regulation of the insurance market is necessary to protect consumer rights, ensure market stability and stimulate its development. However, it is important to find a balance between protection and incentives, control and innovation, bureaucracy and efficiency. For this regulation should be transparent, clear, flexible, and fair. It is also important that regulators cooperate with insurance companies, take their opinion into account, and stimulate innovation. In Ukraine, the insurance market regulation system is constantly developing and improving. However, there are certain problems that need to be solved. It is necessary to reduce bureaucracy, increase the effectiveness of supervision, and stimulate the development of new types of insurance. Effective regulation of the insurance market is a guarantee of its stable development, protection of consumer rights, and growth of trust in insurance companies. The insurance market needs proper regulation to ensure stability, protect the interests of policyholders, and ensure financial security. Regulators should ensure a balance between stimulating innovation in insurance and protecting the rights and interests of consumers. Regulators should actively monitor the financial stability of insurance companies and market risks to prevent possible crisis situations. Regulators should ensure a balance between stimulating innovation in insurance and protecting the rights and interests of consumers, actively monitoring the financial stability of insurance companies and market risks to prevent possible crisis situations.

Insurance, Protection from Risk, and Risk-Bearing

CURRENT STATE AND PROBLEM ASPECTS OF SUSTAINABLE DEVELOPMENT IN INSURANCE MARKET IN GLOBALIZATION CONDITIONS

The article analyzes the solution of an important scientific and applied problem, which is to identify and theoretically generalize the patterns and features of the system and mechanisms of state regulation of non-banking financial services markets, including the insurance market. And also in the development of methodology for assessing the concentration of this market. Peculiarities and regularities of development of non-banking financial services markets in Ukraine during the last fifteen years are considered. The results of research of the insurance market of Ukraine show that the financial performance of this market reflects the state of the economy, living standards and also reflect the quality of the system and mechanisms of state regulation of insurance and other markets for non-banking services. The positive dynamics of the insurance market development after 2015 testified to the effectiveness and management capacity of the system and mechanisms of state regulation of non-banking financial services markets in Ukraine. It is proved that the insurance market of Ukraine is moving in a positive direction, has significant potential for further development, but so far is significantly inferior to similar markets in democratically and economically developed countries. Indicators of the functioning of insurance markets directly depend on the country's GDP and the level of living needs of its population. The main factor holding back the rapid growth of this market is the low effective demand of the population for insurance services. The directions of improvement of public administration mechanisms to increase the efficiency of this financial sphere are substantiated, as well as theoretical and methodological principles and practical proposals for further development of the system of state regulation of non-banking financial services markets in Ukraine, including the insurance market. It is determined that the system and mechanisms of state regulation of non-banking financial services markets should provide for the development and implementation in practice of a set of laws and other regulations aimed at improving these markets, ensuring both state interests and protection of financial services consumers.Targets of the state policy on improvement of mechanisms of the state regulation of the insurance market in the direction of increase of efficiency of its activity are defined.The degree of monopolization of the insurance market and the level of competition in it characterize the indicators of its concentration. The concept of "concentration" in the insurance market should be understood as the process of concentrating the collected insurance premiums in a limited number of insurance companies. This definition is simplified, but sufficient to assess the development of the insurance market and the effectiveness of its state regulation system. Competition in the insurance market is considered as a rivalry of market participants. The main indicator used to assess the level of concentration in the insurance market of Ukraine is the Herfindahl-Hirschman index of the National Research Institute. The methodology and tools used in the study of the concentration and competitiveness of the insurance market based on the values of the Herfindahl-Hirschman index are analyzed. The dynamics of the Herfindahl-Hirschman index in the period 2003-2019 in relation to the life insurance markets, risky types of insurance and in general in the insurance market of Ukraine is determined. It is established that the value of NIS in the market as a whole is directly proportional to the NIS of risky types of insurance and does not depend on the NIS of life insurance. It is shown that the value of this index relative to risky types of insurance and the insurance market as a whole in 2018-2019 decreased. According to the accepted gradation of concentration levels, it was established that in general the Ukrainian insurance market in the last decade corresponded to the degree of low concentration. It is debatable that the life insurance market is moderately concentrated, as the total share of gross insurance premiums collected by the three largest insurance companies in 2017-2019 exceeded ~ 50% of all gross insurance premiums. Under Ukrainian law, this indicator of the total share of insurance premiums concentrated in the three companies determines this market as a monopoly. It is recommended to improve the methodology for assessing the concentration of the insurance market in order to increase its informativeness and reliability. Proposals for the introduction of additional indicators, criteria, coefficients to the Herfindahl-Hirschman index to increase the reliability of assessing the level of monopolization of the insurance market. It is also recommended to introduce adjustment coefficients to the limit values of the Herfindahl-Hirschman index in relation to the insurance services market of Ukraine. The task of public authorities that regulate the insurance market is to introduce measures to increase competition in the market. To improve the reliability of assessments of the insurance market development, it is recommended to expand the monitoring of its concentration by types of insurance services, as well as by regions of the state. It is recommended to approve at the state level the methodology for assessing the concentration of the insurance market. Measures to accelerate the development of the insurance services market of Ukraine by improving the system of its regulation are proposed.

The relationship between the economy of China and global is becoming deeper and deeper. There is also a deep relationship between insurance market of China and global. The development of global insurance market may affect that of China. Reference the theory and method of the co movement of the global stock markets, we did research about this with the data of insurance premium from China insurance market and global market. The results show that the co movement of China insurance market and global insurance market is very significant in the long term, especially in the life insurance market. But the co movement of nonlife insurance market isn't significant. On the other hand, in short term, global insurance market affects China insurance market slightly. But it's different in nonlife insurance market. The change of global nonlife insurance market affects that of China insurance market very much. Especially, the fluctuation of global nonlife insurance market is bigger, the effect to China nonlife insurance market is bigger.

Nowadays insurance industry has huge innovation potential. Several key vectors for developing the concept of insurance tech include machine learning, business analytics, consumer protection rules, Big Data, artificial intelligence, neural networks, blockchain, and telematics. Technological innovations become widespread only when a community that supports them emerges, and COVID-19 has rapidly accelerated the changes that were already in full swing to a greater extent than any other factor. COVID-19 has helped reinforce the story and illustrate the results that technologies achieve on a large scale. Modern marketing and management approaches in insurance are viewed as an activity to optimize and control the insurance company's innovation and marketing activities. It would allow taking a strategically advantageous position in the insurance market. There are two kinds of insurance marketing: structural and commodity. Structural marketing could help to solve the problem of the economic efficiency of the activity of insurance companies. Commodity marketing helps to improve financial activity and, as a result, to increase profitability. This article summarizes the arguments and counterarguments within the scientific discussion on the place and prospects marketing and management in insurance (strategies, functions, principles) in the context of key innovation metrics. The study's primary purpose is to confirm the hypothesis about the functional link between the level of innovative development of the country and key insurance determinants as drivers for transformation in marketing strategies of insurance companies. In this regard, the array of input data is presented in the form of seven independent variables (regressors), six of which denote innovation measures, one is control variable, and five dependent variables (regressands), which identify the insurance sector. The study of the impact of innovation metrics on the insurance sector of the country in the article is carried out in the following logical sequence: 1) the formation of an array of input data; selection of relevant indicators using Principal Component Analysis; 2) formalization of functional relationships between variables by constructing five-panel Multifactor regression models with Random Effects; and 3) interpretation of the obtained results. Seventeen countries of Central and Eastern Europe were selected as the object of the study for the period from 2004 till 2019. The study empirically confirms the above hypothesis, which is evidenced by the following identified dependences. Key insurance determinants depend on innovation fluctuations. The most significant positive influence on the dependent variables is exercised by the Innovations index, Research and development expenditure, and Patent applications by residents. The study results could be helpful for insurance companies that provide new insurance technologies and seek to optimize activities to support innovative development. The main directions of marketing and management in insurance should be considered from two positions applying new technologies in insurance marketing and introducing new insurance products or services.

With the development of information technology, the internet rapidly steals into our daily life, which brings profound changes to each industry. Even the insurance sector, regarded as “the last sleeping giant” in financial industry, is getting rid of the bondage of its complicated rules and regulations, and increasingly involved in a new revolution. Websites providing insurance consulting and doing policy sales spring up in western countries in recent years. With more and more netizens buying insurance and more and more insurance companies conducting their business online, online insurance will become a future trend in the insurance market.

The relevance of the paper is predetermined by the fact that insurance acts as an institute of financial and social protection, and insurance companies (especially for long-term life insurance) are the most important and socially responsible investors, which account for about 8-12% of total investments in developed countries in the economy, which, in turn, serves as a significant factor in economic growth. The purpose of our paper is to prove the relationship between the level of development and dynamics of insurance markets on the one hand, and the level and dynamics of economic growth rates in a number of countries, on the other. To achieve the goal, we set and solved the research objectives: 1) to determine the degree of elaboration of the problem of the relationship between economic growth and the development of the insurance market in a number of countries and regions of the world economy; 2) to construct a comprehensive classification of similar and different characteristics in certain countries of the worlds’ economy (European, Asian, extended countries with a federal structure, post-socialist countries); 3) to highlight some indicators of the level of economic development and growth of classified countries (central bank interest rate, economic growth rate, investment growth rate, etc.) associated with some parameters of insurance market development, primarily with the volume and growth rate of insurance premiums, including the growth rate of life insurance premiums; 4) to classify the insurance regulation models of the grouped countries based on the analysis of the relationship between the selected economic and insurance indicators; 5) to assess the degree of relationship between the development of a relatively young and unbalanced insurance market and indicators of economic growth in Russia. The latter occupies a special place in the classification of the countries under consideration by characteristics of insurance development, by spatial, geopolitical parameters, by indicators of economic development and economic dynamics. The research results and conclusion are the following: 1) there is a direct relationship between the indicators of economic growth and indicators of the development of the insurance market in national economies and regional integration complexes; 2) different types of grouped countries have a different degree of dependence between indicators of economic growth and the insurance market indicators’ development, which is determined, not least of all, by historical, economic, spatial, geographical and geopolitical characteristics; 3) the close relationship between the indicators of economic development and growth of countries under consideration and their insurance markets is ambiguous, due to the fact that the active growth of insurance is noted in countries with a high density and a significant proportion of the young population; 4) the reasons for similarities and differences in the relationship under study are diverse and determined by differences in functioning of socio-economic systems (geographical, legislative, political, social, etc.), as well as by the adopted model of insurance regulation; 5) the growth of the insurance market corresponds to the general economic growth, subject to the intensification of investment activity; 6) life insurance shows a closer relationship with macroeconomic indicators compared to other segments of the insurance market; 7) the importance of studying the proposed problem for Russia in the future is due to its important integrating function for the national insurance markets of European as well as Asian countries.

The article is dedicated to analyzing the risks of monopolization in the compulsory insurance market for civil liability of hazardous object owners. The paper examines the current situation in the insurance market, analyzing the causes of oligopoly formation and decreasing competition, including high requirements for insurers, low insurance premiums, and the low attractiveness of this type of insurance for agents and brokers. Special attention is given to the financial and administrative barriers for new market participants, as well as the structure of insurance premiums, which are distributed among insurance pools. Based on data on insurance premiums and market concentration indicators, the Herfindahl-Hirschman Index was calculated, demonstrating a high level of concentration in the OSOPO market. Trends toward mergers and acquisitions of insurance companies were identified, further contributing to the monopolization of the market. The proposed measures aim to reduce the level of monopolization, increase the accessibility of OSOPO for insurers, and improve conditions for the development of this segment of the insurance market.

Little is known about the breadth of health care networks or the degree to which different insurers' networks overlap. To quantify network breadth and exclusivity (ie, overlap) among primary care physician (PCP), cardiology, and general acute care hospital networks for employer-based (large group and small group), individually purchased (marketplace), Medicare Advantage (MA), and Medicaid managed care (MMC) plans. This cross-sectional study included 1192 networks from Vericred. The analytic unit was the network-zip code-clinician type-market, which captured attributes of networks from the perspective of a hypothetical patient seeking access to in-network clinicians or hospitals within a 60-minute drive. Enrollment in a private insurance plan. Percentage of in-network physicians and/or hospitals within a 60-minute drive from a hypothetical patient in a given zip code (breadth). Number of physicians and/or hospitals within each network that overlapped with other insurers' networks, expressed as a percentage of the total possible number of shared connections (exclusivity). Descriptive statistics (mean, quantiles) were produced overall and by network breadth category, as follows: extra-small (<10%), small (10%-25%), medium (25%-40%), large (40%-60%), and extra-large (>60%). Networks were analyzed by insurance type, state, and insurance, physician, and/or hospital market concentration level, as measured by the Hirschman-Herfindahl index. Across all US zip code-network observations, 415 549 of 511 143 large-group PCP networks (81%) were large or extra-large compared with 138 485 of 202 702 MA (68%), 191 918 of 318 082 small-group (60%), 60 425 of 149 841 marketplace (40%), and 21 781 of 66 370 MMC (40%) networks. Large-group employer networks had broader coverage than all other network plans (mean [SD] PCP breadth: large-group employer-based plans, 57.3% [20.1]; small-group employer-based plans, 45.7% [21.4]; marketplace, 36,4% [21.2]; MMC, 32.3% [19.3]; MA, 47.4% [18.3]). MMC networks were the least exclusive (a mean [SD] overlap of 61.3% [10.5] for PCPs, 66.5% [9.8] for cardiology, and 60.2% [12.3] for hospitals). Networks were narrowest (mean [SD] breadth 42.4% [16.9]) and most exclusive (mean [SD] overlap 47.7% [23.0]) in California and broadest (79.9% [16.6]) and least exclusive (71.1% [14.6]) in Nebraska. Rising levels of insurer and market concentration were associated with broader and less exclusive networks. Markets with concentrated primary care and insurance markets had the broadest (median [interquartile range {IQR}], 75.0% [60.0%-83.1%]) and least exclusive (median [IQR], 63.7% [52.4%-73.7%]) primary care networks among large-group commercial plans, while markets with least concentration had the narrowest (median [IQR], 54.6% [46.8%-67.6%]) and most exclusive (median [IQR], 49.4% [41.9%-56.9%]) networks. In this study, narrower health care networks had a relatively large degree of overlap with other networks in the same geographic area, while broader networks were associated with physician, hospital, and insurance market concentration. These results suggest that many patients could switch to a lower-cost, narrow network plan without losing in-network access to their PCP, although future research is needed to assess the implications for care quality and clinical integration across in-network health care professionals and facilities in narrow network plans.

This study aims to identify the impact of COVID-19 on the Cooperative Health Insurance (CHI) Market in Saudi Arabia by applying Event Study Methodology. The health event identified in this study is the announcement of the first positive case of COVID-19 in Saudi Arabia, which the Ministry of Health announced on March 2, 2020. For this study, the daily price of 24 cooperative health insurance companies listed on the Saudi Stock Market (Tadawul) and the market index (TASI) for the same period (June 05, 2018 - March 30, 2020) were collected. The abnormal returns are calculated using the Capital Asset Pricing Model (CAPM). The study found a negative effect of the COVID-19 pandemic on the health insurance companies in Saudi Arabia during the first week of the anticipation period that continued until the event day. Negative abnormal returns persisted until the end of the total study period but were not statistically significant except on only three days during the post-event window (March 05, 08, and 09, 2020). This means the Saudi cooperative insurance market experienced a period of anticipation and anxiety before the announcement of the first case of Covid-19; however, the information was insufficient and unconfirmed. During the adjustment window, the market tried to adjust itself and react to the event efficiently, but it could not do so. The results of this study are useful to takaful investors, operators, and regulators in the Islamic insurance markets and to researchers and academicians.

We derive the financial market return implications of a number of models of an insurer faced with different regulatory regimes and differing access to financial markets for added capital. If insurers have unhindered access to financial markets and insurance regulation requires an immediate capital contribution to offset a capital deficit, then capital volatility has no impact on insurer equity market returns. In an unregulated insurance market, regardless of access to financial markets, greater volatility reduces expected insurer equity market returns. Finally, in a regulated and capital constrained insurance market, where transactions costs prevent insurers from obtaining financial market capital contributions, greater capital volatility increases expected insurer equity market returns. In empirical testing, we find that volatility decreases the equity market returns of property-liability insurers. This result is consistent with imperfect insurance regulation and policyholders who bear the risk of insurer financial distress with incomplete compensation. In this environment, insurer risk management decreases shareholder wealth because it decreases the likelihood that insurers share financial distress with policyholders.

The homeowners' insurance market in Florida is facing a crisis as prices increase, the availability of coverage decreases, insurers exit the market, and environmental and legal characteristics of the state drive up claims' costs. In this study, we examine trends in the Florida homeowners' insurance market over the past two decades and investigate how participation in the market influences insurer performance. Among the results, we find that involvement in the Florida homeowners' market does not by itself necessarily have an inherently negative effect on overall profitability, but that exposure during periods of substantial hurricane activity is associated with weaker performance. Furthermore, we observe key differences by type of insurer and based on the extent to which an insurer's overall book of business is exposed to the Florida homeowners' insurance market.

This paper uses disaggregated data on real insurance premiums, including life and non-life insurance premiums, to examine the interrelationship between insurance markets’ activities and economic growth for 10 selected OECD countries during the up-to-date 1979-2006 period. We take recently developed panel unit-root tests, heterogeneous panel cointegration tests, and panel causality techniques and conclude that there is fairly strong evidence favoring the hypothesis of a long-run equilibrium relationship between real GDP and insurance markets’ activities after allowing for the heterogeneous country effect. The results of the long-run panel regression parameter indicate a significantly positive relationship between real GDP and the activities within the insurance market, while a development from the non-life insurance market has a greater impact on real GDP than the activities in the life insurance market do. By implementing the dynamic panel-based error correction model, we determine that insurance markets’ development and economic growth present both the long-run and short-run bidirectional causalities.