Development of an Insurance Market in PIGS Countries After the Crisis

The insurance sector plays a crucial role in overall economic development. A studies published in the world literature have not finally confirmed the influence of the development of the insurance industry on economic growth; however, we may assume that the influence is positive. Countries in distress with regard to other activities such as fiscal or monetary policy should influence the overall development of the insurance sector. The paper is aimed at presenting the results of an assessment of the development of the insurance sector in chosen European countries such as Portugal, Italy, Greece, and Spain over the financial crisis, especially from the point of view of product innovation. We have chosen the countries stated owing to the economic situation against a background of the European Union. Those countries have faced budget deficits and were badly hit by the financial crisis of 2007. That is why it is interesting to study the progress of the financial sector, specifically insurance. The insurance market in a specific country is assessed by using taxonomy methods, in particular, two main measures: the distance measure and the similarity measure. The markets are described by a set of features divided into five groups: market structure, technical sphere, finance and investment, effectiveness, and product. The authors have calculated measures at two points in time: 1997 and 2013. The comparison between the level of taxonomic measures in those two years allowed the authors to draw the main conclusion that the financial crisis has stopped the speed of development of markets and has had a significant influence on other spheres as well. In countries such as Greece and Portugal, progress was even slower than that in post-Soviet countries such as Poland. External conditions have not imposed structural changes within chosen insurance markets. However, the general environment was conducive to supporting the expansion of the insurance markets only up to 2007. The influence of the crisis is very visible. The final conclusion is that the sectors were not innovative, mainly with regard to products. Product innovations give the insurer an opportunity to play an important role in contributing to sustainable development on a macroeconomic scale, or even more so—on a global scale. We are convinced that at the age of innovation, the insurance sector cannot remain insensitive to the need for innovation, not only in the area of insurance operation of companies, but also with regard to products. Innovations within the insurance sector become even more important in terms of building competitive strengths of an insurer. An innovative offer can maximize the insurer’s revenue and profits.