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Key Determinants of Efficiency of Functioning Insurance Market for Insurance Companies

Author

Listed:
  • Lada Shirinyan

    (National University of Food Technologies, Kyiv, Ukraine)

  • Artur Shirinian

    (Kyiv National Economic University named after Vadym Hetman, Kyiv, Ukraine)

Abstract

Key Performance Indicators (KPIs) form a system of financial and non-financial valuation that determines the effectiveness of market participants and the degree of functionality of the resources used. The use of KPIs has so far not been used in domestic financial science to analyze the market of financial services of Ukraine. Therefore the purpose of the article is to develop a set of KPI of functioning of the insurance market of Ukraine for insurance undertakings on the basis of macroeconomic and microeconomic indicators, which allows to obtain a comprehensive assessment of the results achieved in the insurance market from the positions of different insurance participants. The methodology of the study is based on the elements of financial analysis in terms of the formulation of KPIs at the microscopic level of the economic player and on the basics of statistical analysis at the macroeconomic level of the insurance market. The number of KPIs is optimized to avoid minor metrics and to make data available for calculation. The authors first developed and classified the KPI of functioning of the insurance market of Ukraine for insurance companies. The relevant KPIs are the following: volume of insurance premiums, price of insurance services, percentage of a load in the tariff, number of contracts, level of insurance indemnity, profit of the insurers, profitability of sales, return on assets. For the service provider, efficiency is ensured by maximizing the price, the number of contracts, premiums and insurance rate, profit and profitability, and by minimizing the level of insurance indemnity. The new approach envisages the possibility of applying the proposed KPIs to assess the effectiveness of the entire insurance market as well as of the individual insurance company or a given insurance service in the market.

Suggested Citation

  • Lada Shirinyan & Artur Shirinian, 2019. "Key Determinants of Efficiency of Functioning Insurance Market for Insurance Companies," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 122-128, September.
    • Handle: RePEc:iaf:journl:y:2019:i:3:p:122-128
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    References listed on IDEAS

    as
    1. Fabio Bertoni & Annalisa Croce, 2011. "The Productivity of European Life Insurers: Best-Practice Adoption vs. Innovation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 36(2), pages 165-185, April.
    2. Mary A. Weiss, 1991. "International P/L Insurance Output, Input, and Productivity Comparisons," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 16(2), pages 179-200, December.
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    More about this item

    Keywords

    key performance indicators; insurance market; insurers; price; load; number of contracts; compensation; profit; profitability;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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