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Penetration of insurers with foreign capital in the insurance market of Ukraine

Author

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  • L. Shirinyan
  • A. Shirinyan

Abstract

The purpose of the article is to investigate the degree of penetration of insurance companies with foreign capital (IFC) into the insurance market of Ukraine and to identify trends in the openness indexes of the Ukrainian insurance market in modern conditions. The main argument for the presence of foreign capital is the improvement of the quality of service provision and the impact on GDP change rate. On the other hand, the question correlates with the problem of financial security of the market. The paper deals with the IFCs activities of in 2007-2017 and uses the author's methodology of the complex estimation of market openness based on the coefficients of market openness by the number of IFCs, by the foreign capital, by assets, by the volume of insurance services, by reinsurance operations, by import and export of services; and by the coefficients of concentration and insurance penetration. It is revealed that most IFCs have foreign capital from Cyprus, Austria, the United Kingdom, the Netherlands and they are the leaders in terms of insurance premiums and insurance payments. Data show that the value of gross premiums, volumes of export and import of insurance services, given in US dollars, have been significantly decreasing. It is shown that the numbers of Ukrainian insurance companies and IFCs after 2008 decreased each year. It is estimated that the insurance market after 2014 became open and strongly dependent and in terms of import and export - closed and autonomous. It is obtained that by the number of IFCs, by the share of foreign capital and in terms of reinsurance, Ukraine's insurance market is optimally open when national benefits are secured. A detailed analysis showed that the concentration for the first three IFCs is about 9.22%, which indicates an absence of monopolization by the IFCs, although in recent years the concentration tends to increase. The value of insurance penetration for the IFCs is low, nearly 0.56%, which indicates the actual absence of the influence of the IFCs activities on GDP formation.

Suggested Citation

  • L. Shirinyan & A. Shirinyan, 2018. "Penetration of insurers with foreign capital in the insurance market of Ukraine," Economy and Forecasting, Valeriy Heyets, issue 2, pages 76-90.
    • Handle: RePEc:eip:journl:y:2018:i:2:p:76-90
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    References listed on IDEAS

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    3. J. David Cummins & Bertrand Venard, 2008. "Insurance Market Dynamics: Between Global Developments and Local Contingencies," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 11(2), pages 295-326, September.
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