Non-life insurance markets in CEE countries– part II: Polarisation and concentration

Abstract

(ProQuest: ... denotes formulae omitted.)IntroductionSince the European Union accession in May, 2004, the non-life insurance markets in CEE countries faced many opportunities for growth. In the academic debate, however, an attention was given to the performance of insurance sector as a whole or to other segments of financial system (banking and capital markets in particular). Studies addressing the tendencies on selectively the non-life segment of insurance market remain scarce. In this context, there is an obvious research gap. Moreover, there are virtually no studies that compare the insurance markets performance in cross-country perspective, in this with a focus on CEE countries. This study may contribute to fill in the identified research gap, as it aims at evaluating the general tendencies of the development of non-life insurance markets in the eight CEE countries, that overcame transition at similar period of time (the 1990s) and accessed European Union on the 1st May 2004. Thus, these countries are regarded as a relatively unified sample of European Union member countries.The first part of this study1 gave the background of the general tendencies observed on non-life markets of the CEEs countries. In the overview of previous studies, the available works and researches were discussed and led to the distinction of three important periods of non-life market development in these countries. The first was pre-transition period when the markets were operating under the regime of command economy. The second was the transition period when the rapid changes began, mostly due to the high pace of foreign direct investments. The third period was the accession period which began with the European Union accession in 2004. This period was in focus of the empirical evaluations of nonlife market tendencies in the first part of this study, where the problem of products' structure of the non-life markets was addressed. It was found that in many cases there was still a strong domination of MTPL (motor third party liability) insurance. In this paper (as the continuation of the study and its second part) the trends within non-life markets polarisation and concentration were analysed.The paper is structured as follows. The first section explains the adopted research design and methodology. The second section presents and discusses the results and is broken to subsections referring the polarisation of gross premiums written, insurance penetration and density ratios, and finally market concentrations ratios. The fourth section concludes the study.1. Research design and methodologyThe study of concentration and polarisation of non-life insurance markets presented in this paper refers to the situation of eight CEE countries: Czech Republic, Hungary, Slovak Republic, Slovenia, Poland and three Baltic states: Latvia, Lithuania and Estonia (further referred to as the EU-8 countries). These countries formerly performed in terms of command economy and overcame transition in similar period (in 1990s). Moreover, these countries joined together the European Union on 1st May 2004, which created certain conditions of further insurance market development (due to the required harmonisation).The evaluation of concentration and polarisation performed in this paper was focused on observations for four years: 2004, 2008, 2012 and 20152. The four-year time frame was adopted with the aim to capture 2004 as the initial observation and the beginning of accession, then 2008 to capture the year of the global financial crisis emergence and 2012 to capture the post-crisis state. In order to show the recent trends, 2015 was added to observations.The data analysed in this paper was derived from the official statistics provided by the EU-8 national supervisory bodies or national associations of insurers. In some cases the statistics offered by Swiss Re were used as well. Additionally, some aspects of the research were based on the data provided by the federation of European insurers' associations. …