Operation Of Insurance Companies Research Articles

Impact of digital technologies on the development of insurance activities

Innovative technologies have rapidly entered the life of people and society as a whole, particularly in the economic sphere. One of the economic sectors where the need to utilize digital technologies prevails is insurance. Innovative technologies contribute to the improvement of all processes in the insurance market. The positive development of insurance largely depends on the introduction and use of digital technologies. This article is devoted to analyzing and evaluating the impact of digital technologies on the development of insurance activities. This article examines the impact of digital technologies on insurance activities. The main objective is to describe the main technologies themselves and their application in risk assessment, loss prevention and improvement of insurance services processes. In order to achieve this task, we have reviewed sources on the topic, considered projects and studies in the field of application of digital technologies in insurance activities, and analyzed the data obtained. The work resulted in the presentation of digital science technologies used in the operations of insurance companies, such as artificial intelligence, internet of things, blockchain, and how these technologies can be applied in risk assessment, loss prevention and improvement of insurance service processes. The results can be used by insurance companies applying various digital technologies in their operations, namely online sales of insurance policies, data collection and analysis, artificial intelligence and machine learning to develop the insurance market.

Bivariate Poisson Credibility Model and Bonus–Malus Scale for Claim and Near-Claim Events

With the emergence of telematics, huge amounts of data have become available to insurers, raising the question of their integration into motor insurance pricing. Near-claim events are dangerous events that could have triggered a claim. Typically, they correspond to harsh deceleration, acceleration, or cornering. Based on the motor third-party liability insurance portfolio of an insurance company operating in Belgium, we highlight that deceleration events are the best candidates for characterizing near-claim events. Then, we propose to integrate these events in the pricing structure in addition to a policyholder’s claim history with the help of a bivariate Poisson-Lognormal credibility model. Finally, we design an original bonus–malus scale based on both claim and near-claim events.

INCREASING THE COMPETITIVENESS OF INSURERS AND MATCHING THE REQUIREMENTS OF INTERNATIONAL STANDARDS

In this article, it is stated that the operation of insurance companies in accordance with the standards of solvency and maintaining financial stability will increase their competitiveness and investment attractiveness and open the way to international markets. Also, the experience of developed countries regarding the implementation of the Solvency II directive on compliance with solvency standards was studied, relevant conclusions were drawn, and proposals and recommendations were developed in this regard.

ОРГАНІЗАЦІЙНО-МЕТОДИЧНІ АСПЕКТИ ПОБУДОВИ СИСТЕМИ ВНУТРІШНЬОГО КОНТРОЛЮ ПІДПРИЄМСТВ СТРАХОВОЇ ДІЯЛЬНОСТІ

The article examines the importance of internal control in the insurance sector and its impact on financial stability and customer confidence. Various approaches to the organization of internal control are considered, such as internal audit, control services and outsourcing. The effectiveness of these approaches and their influence on the financial indicators of insurance companies were studied. The results of the analysis confirm that the implementation of an effective internal control system contributes to ensuring financial stability and customer trust, which is critically important for the successful operation of insurance companies. The development and implementation of an effective system of internal control in insurance companies are key aspects of ensuring their stability and reliability in a constantly changing business environment. This system allows not only to minimize the risks of financial losses through effective management of resources and assets, but also ensures compliance with legal requirements and standards. Various methods were used in the research process, such as logical analysis for the evaluation of scientific works, an analytical approach for analyzing the costs and effectiveness of system implementation, as well as a graphic representation of the process of building a controlling system. Therefore, this article highlights the importance of internal control for insurance companies and provides recommendations for optimizing this process. The implementation of an effective internal control system can become a decisive factor for ensuring the sustainability and success of insurance companies in the modern competitive environment. This analysis points to the need for further research in this direction, in particular, the development of new methods of internal control, evaluation of their effectiveness, and the introduction of innovative approaches to the insurance business. Such studies can contribute to the further increase of competitiveness and stability of insurance companies in the conditions of constant changes in the market.

The Impact of the Bankruptcy of the Insurer Operating in the EU under Freedom of Establishment Rules on the Performance of the Insurance Guarantee Fund in the Compulsory Motor Third-Party Liability Insurance System

Cross-border activities of European companies, including insurance undertakings, constitute the major component of EU legal system. The freedom of establishment and the freedom to provide services rules are the crucial foundations of the single internal market, as they enable EU entrepreneurs to take up and pursue economic activity in the territory of another Member State. Unfortunately, the EU market has its weaknesses, one of which has been recently experienced by the Polish insurance market. This is due to the lack of a uniform guarantee system which would coherently deal with the issues related to the European insurer’s insolvency and, above all, to the settlement of claims of entitled persons and to the payment or refund of benefits, which has particular consequences for entitled persons holding motor third-party liability insurance, being the most popular insurance product.Given the above, the performance of the Polish Insurance Guarantee Fund is of the utmost importance. The legislator has failed to precisely regulate several issues related to the organisational aspects of the institution’s activities of in the event of bankruptcy or compulsory liquidation of an insurance company operating in Poland on a cross-border basis. Therefore, some demands for amendments to the Compulsory Insurance Act have been presented. The most urgent demand, however, is about providing for unambiguous method for determining which Member State’s guarantee scheme should satisfy the claims of entitled persons, i.e. whether it should be the scheme of the insolvent or bankrupt insurer’s home Member State or rather the scheme of the Member State where it conducted its cross-border operations. Besides, the determination of the mode of reimbursement by the guarantee scheme of the insolvent or bankrupt insurer’s country of origin will increase the level of responsibility of supervisory institutions of that country for the operation of entities subject to their supervision and conducting cross-border business.

Machine Learning in Medical Insurance Prediction

Nowadays, the trend of an ageing society is more and more obvious. Accompanied with the huge population of the elderly, the medical insurance industry has more prospects and potential. As a result, more service and business operations of insurance companies are in need. With the analysis from past data, computer algorithms help a lot in predicting the new output values, aiding data-driven business decisions, ranking of influential factors and digital computerization. Through machine learning, the insurance companies are able to make a decision flatly in premiums without having unnecessary medical expenditure. The provided models include linear regression, polynomial regression, and random forest. Through the comparation of these three models, with the output data of MAE and other indicators, we can see that polynomial regression is the best model. Within the efficient operation of this method, it can soon be prevalent among the medical industry. Avoiding problems of high cost of labor and inevitable manmade mistakes, polynomial regression aids the technical advance and statistical progress to prosper.

TRANSFORMATION OF INSURANCE SERVICES MARKET

In the article, suggestions are given for the operation of insurance companies based on clear target plans through the system of innovative and motivational approach to service delivery.

Technological Progress and Cultural Change in Sharia Insurance: Impact and Challenges

The aim of the research is to find out how the impact and challenges of technological advances and cultural changes in Islamic insurance. This is because this paradigm shift not only affects the operations of insurance companies, but also permeates cultural elements in the industry. The researcher used a qualitative methodology. The data collection technique is sourced from books, related journals and the internet. The analysis method used was descriptive analysis. The results of his research state that technological advances, such as the use of artificial intelligence, big data, have shaped a new landscape in risk management and insurance services. Meanwhile, cultural changes in society also affect consumer preferences and norms surrounding Islamic insurance. In terms of impact, the increase in operational efficiency, personalization of services, and product innovations that arise thanks to the latest technology or in general the impact is becoming efficient, personalized, scalable and agile. However, challenges such as lack of capital, lack of professional human resources, cyber security risks, evolving regulations, and adaptation to cultural changes

Machine Learning in Forecasting Motor Insurance Claims

Accurate forecasting of insurance claims is of the utmost importance for insurance activity as the evolution of claims determines cash outflows and the pricing, and thus the profitability, of the underlying insurance coverage. These are used as inputs when the insurance company drafts its business plan and determines its risk appetite, and the respective solvency capital required (by the regulators) to absorb the assumed risks. The conventional claim forecasting methods attempt to fit (each of) the claims frequency and severity with a known probability distribution function and use it to project future claims. This study offers a fresh approach in insurance claims forecasting. First, we introduce two novel sets of variables, i.e., weather conditions and car sales, and second, we employ a battery of Machine Learning (ML) algorithms (Support Vector Machines—SVM, Decision Trees, Random Forests, and Boosting) to forecast the average (mean) insurance claim per insured car per quarter. Finally, we identify the variables that are the most influential in forecasting insurance claims. Our dataset comes from the motor portfolio of an insurance company operating in Athens, Greece and spans a period from 2008 to 2020. We found evidence that the three most informative variables pertain to the new car sales with a 3-quarter and 1-quarter lag and the minimum temperature of Elefsina (one of the weather stations in Athens) with a 3-quarter lag. Among the models tested, Random Forest with limited depth and XGboost run on the 15 most informative variables, and these exhibited the best performance. These findings can be useful in the hands of insurers as they can consider the weather conditions and the new car sales among the parameters that are considered to perform claims forecasting.

Analysis of the activity of the insurance company and prospects of its development on the market of insurance services (on the example of PJSC “Insurance Group “TAS”)

The relevance of the work lies in the need to ensure the effective operation and development of insurance companies on the insurance services market in the conditions of globalization and growing international competition. The purpose of the study was to define the essence and to do the analysis of insurance services for individuals and legal entities as well as the prospects for their development. The study used the method of analysis and synthesis, and the factor analysis of the overall profitability indicators was also carried out. The analysis of insurance services was carried out on the example of the activities of the insurance group “TAS”. The main results of the study are presented in the analysis of the financial and economic indicators of the insurance group “TAS”. The dynamics of insurance premiums, insurance payments and insurance reserves of the company under study, including those by type of insurance services, are analysed. The analysis proved that the insurance company “TAS” currently holds the leading positions on the Ukrainian insurance market in terms of insurance payments. The factors that positively influence the development of insurance and ensure its constant financing are considered. In order to determine the level of profitability on the insurance services market, the article analyses profitability indicators for the products of the insurance company “TAS” and tracks the impact of changes in the structure and volume of insurance products on these indicators. The article presents the structure of the insurance development cycle, which allows to define the goals of insurance services development and requires an assessment of the company’s capabilities for their implementation. It is proved that the introduction of new insurance services will allow the insurance company “TAS” to ensure continuous and stable operation on the market. The practical significance of the research lies in the substantiated prospects for the development of insurance company services

Research on the Willingness and Influencing Factors of Urban and Rural Residents to Purchase Inclusive Supplementary Medical Insurance

The customized commercial supplementary medical insurance with Chinese characteristics, characterized by active government participation, market-oriented operation of insurance companies, voluntary participation of residents, and protection for major diseases, has filled the gap between social basic medical insurance and traditional commercial health insurance, and has become an important breakthrough in building a multi-level medical insurance system in China. To understand the willingness of residents in Anhui Province to purchase "Anhui Huibao" and explore its potential market, expand the coverage of this commercial health insurance in the province. This article uses a binary logistic regression model to analyze the significant factors affecting the purchase intention of "Anhui Huibao". Among them, there is a significant negative correlation between the economic level of the respondents and their willingness to purchase commercial health insurance; There is a significant positive correlation between the number of hospitalizations of respondents in the past two years, their awareness of the cost of treating major diseases, and the age restriction of policyholders in Anhui Huibao, as well as their willingness to purchase. Finally, this article proposes suggestions.

Profitability determinants of life insurance companies in the Republic of Serbia

Background: Based on the results of research on the influence of certain internal and external factors on the profitability of insurance companies in the countries in Europe, America, Asia and Africa in the 21 st century which were published in a significant number of scientific and professional papers, the present study analyses insurance companies in Serbia in the period from 2015 to 2021. We chose this analysis bearing in mind the previous negative experiences and expressed distrust in the financial system, which greatly affected the readiness of policyholders to invest in life insurance products, as well as affecting significantly the development of life insurance in Serbia. Purpose: The aim of the paper is to present the business results of the insurance companies on the Serbian market in the analysed period and to determine which business performance the management of an insurance company should pay attention to in order to ensure positive business results. Study design/methodology/approach: We applied a fixed effects model on the nine selected variables. In the model, return on assets (ROA) is used as a dependent variable, while operating margin, expense ratio, investment ratio, growth rate of written premium of a company, company size, log (financial leverage), log (liquidity ratio), and market share are independent variables. Findings/conclusions: The results of the research indicate that there is a statistically significant and positive impact of operating margin and liquidity ratio on ROA, and statistically significant but negative impact of expense ratio and financial leverage on ROA. Limitations/future research: The limitation of our profitability analysis is that we were unable to analyse the impact of individual life insurance products on profitability. Bearing in mind numerous and significant social and economic changes over the last two years, the directions of our future research will be focused on their impact on the business operation of insurance companies.

Classification of climate-related insurance claims using gradient boosting

The aim of this paper is to implement, one of the most representative supervised learning approaches, the decision tree based ensemble method called gradient boosting for classifying the number of claims caused by storms in Greece using data from a major insurance company operating in Greece. Finally, a machine learning algorithm is used to for categorising the number of claims which have been occurred by a “storm event” into 3 categories: “no claims”, “1 claim”, “2 or more claims”.

Identifying the Configurations to Operating Efficiency in China’s Life Insurance Industry Using Fuzzy-Set Qualitative Comparative Analysis

This paper aims to measure the operating efficiency of 22 Chinese domestic and foreign-funded life insurance companies from 2013 to 2017 and outline the path to achieve high-quality development. The DEA-Malmquist was used to evaluate the total factor productivity on the sample of 22 Chinese domestic and foreign-funded life insurance companies. A fuzzy set qualitative comparative analysis (fsQCA) was also used to analyze the configuration of determinants affecting technical efficiency. The results show that the overall operating efficiency of life insurance companies in China is relatively satisfying. The changes in total factor productivity are mainly caused by changes in technical efficiency and changes in efficiency. However, changes in scale efficiency have little effect on Chinese domestic and foreign-funded life insurance companies. There is a significant difference in the operating efficiency between Chinese domestic and foreign-funded life insurance companies. In contrast, the operating efficiency is slightly higher than that of foreign-funded life insurance companies, which is mainly reflected in the difference in pure technical efficiency. The realization path of a life insurance company’s operating efficiency is primarily composed of high employee education and low overclosing ratio, high employee education and low reinsurance ratio, and all-factor positive investment. The weak employee quality and excessive overclosing are the main reasons for the low operating efficiency of some enterprises. This paper systematically analyzes the impact of the organization’s internal structure on the operating efficiency of life insurance companies. Finally, based on the configuration perspective, we explain the internal logic and path of achieving better operating efficiency. In the end, we also provide decision-making references for further improving the efficient operation of life insurance companies in China.

About the Mutuality Principle in Insurance – an Attempt at Reinterpretation

The operation of mutual insurance companies is based on the mutuality principle in providing their members with insurance. In Polish legal doctrine, the mutuality principle has been mainly associated with the non-final nature (amount) of the premium. It has been even indicated that there is no obligation to pay a fixed premium in mutual insurance. The article analyses whether such an understanding of the principle of mutuality is confirmed by the regulations in force and whether it is factually consistent with the current interpretation of this rule. Moreover, an attempt has been made to identify the key features of the principle of mutuality.

INFLUENCE OF MACROECONOMIC FACTORS ON THE GROWTH OF THE INSURANCE INDUSTRY

Purpose: The purpose of this study was to examine the influence of macroeconomic factors on the growth of insurance industry in Kenya.
 Materials and Methods: The main research approach used in this study relied on review of previous studies related to the study topic. This involves the use of secondary data obtained from institution records, government publications, historical and statistical records etc. This type of data is frequently chosen since it can be conveniently accessed and reduces the need for field research. Therefore, this study will rely heavily on already published studies, journals and annual records of insurance companies in Kenya to obtain secondary data that will be used to draw the results, conclusion and recommendations of the study.
 Findings: The findings from the empirical studies were found to have conceptual, contextual and geographical gaps. This is because most of these studies discussed on either internal factors or both internal and macroeconomic factors influencing the performance or profitability of insurance companies. The findings of these studies were also limited to a few measures of growth of insurance firms. In addition, most of the empirical studies were not carried out in Kenya. Hence, the findings of these studies may differ due to the different governing systems used by different countries that also affect the operations of insurance companies.
 Unique contribution to theory, practice and policy: This study will be of great benefit to the different stakeholders in the insurance sector in Kenya. The management of the insurance companies will gain a broad understanding of the numerous macroeconomic factors and how they impact the performance and profitability of insurance firms. The policymakers in the insurance industry will also benefit from the suggestions and recommendations given on measures and policies that can be used to reduce the adverse effects of macroeconomic factors on the growth of the insurance industry. The findings of the study can also be used as a reference point to identify the macroeconomic factors that have a positive influence and those with a negative influence on the development of the insurance industry. Further, this study will also be relevant to the different researchers and academicians since the study's findings will be incorporated into their body of literature and act as a basis for their empirical studies. On the other hand, the scholars may also be motivated to carry out additional research in order to improve on the theories used in this study and fill any identified research gaps.

Research on the Digital Operation of Agricultural Insurance Companies Empowered by Artificial Intelligence

Research on the Digital Operation of Agricultural Insurance Companies Empowered by Artificial Intelligence

The impact of macroeconomic factors on the development of the insurance system in Ukraine

The functioning of the insurance system is associated with the dynamics of development and the current state of the economy, the political and social situation in a country, the legal field of operation of both insurance companies and economic agents. That is why the effective development of the insurance system is impossible without a deep understanding of the factors of the macroeconomic environment that can determine the scale of insurance activity. The aim of the study is to identify and determine the impact of macroeconomic factors on the development of the insurance system in Ukraine. To analyze the exogenous factors influencing the development of the insurance system, the study uses the method of PESTL analysis, as a result of which the strength of the influence of factors was assessed by insurance experts through a questionnaire. It is determined that political factors play an important role in the development of the insurance system. It is proved that economic factors influencing the insurance system have a direct impact, since the decline in production, rising inflation, which is reflected in the reduction of purchasing power of the population, leads to a reduction in insurance premiums to insurance companies. Social factors influencing the development of the insurance system manifest themselves through trust in insurers, which is the catalyst for the development of the insurance system. Technological factors influencing the development of the insurance system are represented by the level of development of innovations and technologies in insurance, the level of penetration of the Internet and mobile gadgets into the insurance system, the degree of globalization and openness of the insurance system. It is determined that legal factors are inhibitors of the development of the insurance system, as they do not create appropriate conditions for its improvement and development. It is concluded that economic factors have the greatest impact on the development of the insurance system and the functioning of its elements. AcknowledgmentsThe authors with to thank V. S. Krupka, Certified consultant of IC “OVB Alfinance Ukraine”, kvolody@ukr.net; V. O. Plyuta, Director of Khmelnytskyj Branch of IC “Providna”, Head of the Center for Reception and Customer Service in Khmelnytskyj, v.plyuta@providna.com.ua; and V. V. Kulchytskyi-Polyvko, Deputy Director of the Center for Corporate Sales Development in the Western Region of IC “Unika”, office@uniqa.ua.

Alona Sokolova, Olena Hasii, Oksana Tymoshenko, Nataliia Pedchenko CURRENT TRENDS IN THE DEVELOPMENT OF UKRAINE'S INSURANCE MARKET IN DIGITADIZATION CONDITIONS

Purpose. The purpose of the article is to investigate promising areas for improving the efficiency of insurance products and services through the use of digital technologies while also ensuring financial inclusion. Methodology of research. The study employed methods of tabular and graphical results presentation, logical generalization, comparative analysis, and systematic approach (which takes into account the dynamic functional relationship between the state of the whole and the balance of its constituent elements), dynamic analysis, logical, and theoretical generalization. Results. The authors propose their own interpretation of the concept of "digitalization". An assessment of trends in the development of Ukraine's insurance market has been carried out in order to determine insurance companies' readiness to implement technological innovations that increase the efficiency of the insurance industry. The extent to which InsurTech has penetrated the Ukrainian insurance market has been determined. Recommendations have been provided for the incorporation of digital technologies (Smart City, VAS – Studio of Visual Analysis) into the operations of insurance companies in Ukraine. The practical significance of the research results. The adoption of digital technologies in Ukraine's insurance market will boost insurance companies' efficiency and improve the quality of their insurance services.

Impact of climate changes on the insurance market

The problem of climate change is a current social problem in today's civilization. At the same time, it is an ecological problem, but also an economic, political, social, cultural, health problem, etc. It is a global environmental problem, and for this reason we are talking about global climate changes, which affect states, nations, continents, regardless of where they are and what their degree of guilt is in creating and maintaining these changes. The problem of climate change is not easy to define within the framework of only one science, regardless of whether it is natural or social sciences. Bearing in mind the causes and consequences of this social and natural problem, as well as the survival of the natural world and civilization, the question of the context and basis in which this problem can be thought through scientifically also naturally arises. According to all the indicators of various researches of insurance companies, the insurance sector is increasingly involved in the management of risks related to climate change. The issue of determining the potential short-term and long-term effects of climate change on the operations of insurance and reinsurance companies is a priority and the ultimate goal is to find measures to minimize risks and damages. That is why the insurance sector must include climate change in its risk assessment and in that way adequately adjust its product, i.e. insurance.