Home  Journals  Finance and Credit  38(614) - 2014 October

Regional markets of motor insurance: the current state and development prospects

Available online: 12 October 2014

Subject Heading: Insurance

JEL Classification: 

Pages: 48-59

The article points out that the understanding of the specifics of regional markets is a relevant and essential issue of an insurance company's development strategy. In the modern insurance practice, the regions account for about half of total insurance premium collection. Therefore, each large federal insurer pays great attention to the efficiency of work in the regional insurance markets. However, the planning of sales through insurance companies' branch network still has a number of difficulties. This situation has evolved partly due to the lack of developed tools of macroeconomic analysis of insurance market in regions, and this fact was the starting point for the present study. The statistics of the regulatory authority of regional insurance markets, which is used by insurers, served as primary material for the study. We have assessed the regional structure of retail and corporate motor insurance. The basis of the existing approaches to solving this problem is the assumption that the ratio of retail and corporate components in each territorial entity of the Russian Federation will be approximately the same as those across Russia as a whole. The merit of such a technique is its simplicity, and its disadvantage lays in ignoring the specifics of individual regions. The proposed approach seems to be more reasonable as it envisages individual calculation of the ratio of retail and corporate motor insurance for each constituent entity of the Russian Federation. The analysis bases on the assumption that in some regions this ratio can deviate significantly from the resulting ratio across Russia as a whole. We have made an attempt to solve the problem of premium valuation of corporate and retail motor insurance at the level of a constituent entity of the Russian Federation using econometric methods. We conclude that the ratio of insurance premium of individuals and legal entities is not the same in the analyzed regions, and it may significantly differ from the all-Russian ratio. In this regard, we have identified the main factors affecting the share of corporate motor insurance in regions and made proposals related to improving the approaches to the planning of sales through the branch network.

Keywords: regions, constituent territories, Russian Federation, motor own damage, third party liability, retail, corporate, insurance, motor-vehicle pool, regional insurance markets

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