Alexander Saus  

Insurance by Numbers: Comparative Analysis of EU, Ukraine and Poland Key Market Indicators Dynamics (2010 – 2015)

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The development of insurance services is a significant vector in the EU-Ukraine integration process. This review is devoted to analyzing where our country stands in terms of key indicators of the insurance market compared to those of the European states.  Ukraine, EU 15 and Poland were chosen for this indicators’ dynamics comparison due to the following reasons: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, and The United Kingdom are the countries representing the most mature markets of EU 15. Ukraine and Poland, on the other hand, are two neighboring markets similar in size, and more importantly, having had almost identical start conditions for economic transformation in the early 90s.

Insurance penetration, density and loss ratio are common parameters indicating the market maturity level. Density is measured in currency units and is calculated as a relation of total insurance premiums to the country’s population. It basically equals insurance expenses per capita. Penetration, on the other hand, is represented by the ratio of total insurance premiums to the gross domestic product of a country. It is normally given in %. Loss ratio is also a relative indicator measured in % and calculated as the relation of total claims paid to total insurance premiums.

Data dynamics for EU 15, Ukraine and Poland are provided in charts and tables below:

Figure 1. Insurance market penetration, %

 

2010

2011

2012

2013

2014

EU 15

82.34

89.31

87.84

83.29

80.30

Poland

68.08

69.83

64.02

63.82

62.39

Ukraine

26.45

21.43

23.95

16.23

18.90

Table 1. Loss ratio, %

Figure 2. Insurance market density, €

 

2010

2011

2012

2013

2014

Ukraine

456

442

414

407

382

Poland

63

61

59

58

80

Table 2. Number of insurance companies’ dynamics

Ukraine

Q1-3 2015

Density, €

21.14

Penetration, %

1.58

Claims payment ratio, %

21.5

Number of insurance companies

368

Table 3. Current key insurance market indicators of Ukraine

Comparing market indicators of Ukraine to European Union 15 and Poland allows the conclusion that our country, unfortunately, is still far behind mature European markets as well as Poland’s emerging one.

The following factors impede the development of the national insurance services segment:

  • Lack of sufficient population’s paying capacity;
  • Distrust to the quality of insurance services;
  • Unequal distribution of insurance services geographically;
  • Insurance culture’s low level
Ukraine-EU’s association road map calls for the advancement of the insurance market as the crucial condition for facilitating national financial services sector
Ukraine-EU’s association roadmap calls for the advancement of the insurance market as the crucial condition for facilitating the financial services sector of Ukraine. The steps needed to encourage the growth of the key insurance market indicators are, to our mind, as follows:

  1. Expanding the powers vested in the governmental authorities supervising the financial services market regarding the monitoring of insurers’ solvency and quality of the services offered.
  2. Ensuring an effective and prompt process of claims settlement
  3. Focusing on the life insurance segment and the development of which, in turn, will contribute to social security and retirement benefits.
  4. Providing a broader choice of insurance products offered on the market
  5. Introducing and implementing a system of compulsory health insurance.

Insurance in Ukraine by Numbers.pdf


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