AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
THE IMPACT OF DEVELOPMENT OF INSURANCE MARKET AND ECONOMY ON THE
COMPETITIVENESS OF THE COUNTRY ON EXAMPLE OF V4 COUNTRIES
a
ELENA ŠIRÁ,
b
ROMAN VAVREK,
c
RYSZARD PUKALA
a,b
Faculty of Management, University of Prešov in Prešov,
Konštantínova 16, 080 01 Prešov, Slovakia
c
The Institute of Economics and Management, State School of
Technology and Economics in Jaroslaw. Jaroslaw, Poland
email:
a
elena.sira1@gmail,com, elena.sira@unipo.sk,
b
vavrek.roman@gmail.com,
c
ryszard.pukala@interia.pl
Abstract: Competitiveness is an important indicator, which clearly defines the position
and maturity of the country. But what factors affect this competitiveness? Is it only
economic performance measured by GDP? What role in this competitiveness is played
by insurance market? We try to find answers to these questions. On the example of V4
countries, we try to identify, if the development of insurance market has influenced the
competitiveness of the country and what role in this competitiveness economy
indicators play.
Keywords: Insurance market indicators, Economy indicators, Global Competitiveness
Index..
1 Introduction
Insurance industry plays an important role in all economies,
especially in market economies. (Pukala, 2011) Insurability and
insurance industry in the states of the European Union is one of
the most important components of all economies. This sector
fulfils a very important role in any country’s economy and
stability of people’s life. (Pukala, 2012) Insurance industry as a
sector of the national economy offers their goods (financial
services) in the insurance market. They include all the relations
between the "seller" and "buyer" who use insurance as the
subject of their exchange. Insurance services are considered to
be specific goods which execution takes place in the insurance
market. Insurance helps to address the underlying problems that
may arise in connection with an emergency of unexpected
events. (Širá - Radvanská, 2014) It helps businesses to maintain
economic stability but also ensures the standard of living of
citizens under various unforeseen negative conditions.
Insurance covers the various risks as the need of every society. It
represents a system of various market instruments and regulatory
measures that ensure the flow of funds and insurance services
among the insurance market on the principle of conditional
return and non-equivalence. (Širá, 2012)
Insurance is divided into two main categories namely:
life insurance,
non-life insurance.
Life insurance is a personal insurance against death, survival, or
a combination thereof. Non-life insurance contains insurance of
tangible assets, intangible assets, liability insurance and personal
accident insurance. Compared to life insurance, the insurer in
this case clearly does not know whether the insured event occurs
or not, and the questionable is the time of insured event.
(Kafková, 2007) Based on the above division, commercial
insurance companies can be divided into life, non-life and
universal. If commercial insurance companies provide
exclusively life insurance products, we talk about life insurance
companies. If they provide products exclusively on non-life
insurance, they are called non-life insurance companies. In case
of providing products from both areas, we talk about universal
insurance companies. In some countries, insurance market is
operated by all three types of insurance companies, but in some
countries there are only life or non-life insurance companies.
(Širá - Radvanská, 2014)
However, even though the potential contribution of insurance
market activity to economic growth has been recognized, the
assessment of a potential causal relationship between insurance
market activity and economic growth has not been as extensively
studied as that of banks and economic growth. (Arena, 2008) We
found some studies, where foreign authors analyzed the impact
of insurance on the economy of the country. E. g. Kozak (2011),
Pukala - Kafkova (2014) and Pukala (2014) analyzes the
determinants of the profitability of 25 general insurance
companies from Poland during 2002 – 2009 and their effect on
national economy. Haiss and Sümegi (2008) analyzed relation
between premiums and GDP. Bahloul and Bouri (2016) analysed
the efficiency of European non-life insurance to economy.
In case of Slovak authors, there are some studies about
development of insurance market, e. g. (Grmanová - Jablonský,
2009), (Pastorakova - Drugdova, 2009), (Kafková, 2007),
(Pastoraková, 2006), (Širá, 2012) but there are missing studies
on impact of insurance on national economy. Many other
authors as Adamišin, Kotulič, Kravčáková Vozárová (2017),
Vavrek (2017a) or Kotulič et al. (2015) deal with similar
research based on use of several indicators at local or national
level.
2 Methodology
The aim of this paper is to identify, if the development of
insurance market influenced the competitiveness of the country
.
We set up the relationship as follows:
where the independent variable represents competitiveness of the
country measured by score gained in GCI published by World
Economic Forum every year. Dependent variables were sets into
2 groups, where the first group of variables were economy
indicators (GDP and UNEM - unemployment) and in the second
group were indicators representing the insurance market (WP
life
- written premium in life insurance, Pen - penetration rate and
Cr
5
- concentration ratio 5).
We have analysed the countries belonging to the group named
V4, it means the Czech Republic (CZ), Hungary (HU), Poland
(PL) and the Slovak Republic (SK), in the years 2003 - 2015.
The relation between selected indicators was described by
Kendall coefficient,
where: n - number of observations of pair of variables
- number of discordant pairs
- number of concordant pairs
regression analysis and the methods of least squares
where:
- measured value of dependent variable
- estimated value of dependent variable
- random error of dependent variable
with expressing the force of the model using a determination
coefficient (Vavrek, 2017b).
where:
- measured value of dependent variable
- estimated value of dependent variable
- average value of dependent variable
The analyses were made by MS Excel, Statistica 13 and
Statgraphics programmes.
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