Innovations in the insurance market of a developing country: Case of Ukraine
-
DOIhttp://dx.doi.org/10.21511/imfi.17(4).2020.17
-
Article InfoVolume 17 2020, Issue #4, pp. 175-188
- Cited by
- 884 Views
-
203 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Modern insurance business, including in developing countries, is associated with the introduction of innovations. The purpose of this paper is to clarify the features of the insurance market’s innovation in Ukraine by reviewing the literature and analytical data on the market as a whole and its individual participants. The results show that innovations implemented in the insurance market can be classified according to certain characteristics, which provides opportunities for its empirical study. The analysis reveals that the peculiarities of the innovative development of the Ukrainian insurance market are determined by many factors, among which digitalization and increased risks due to the COVID-19 pandemic are the main ones today. Based on the analysis of leading insurance companies’ practice, it is concluded that they implement only a limited amount of innovations, mainly of incremental and combinatorial types, and do not actively use modern communication channels with consumers. The results highlight the need for insurance and FinTech companies to cooperate in the innovation ecosystem, which is still being formed in the Ukrainian insurance market. The study also considers the possibility of using a system of indicators to assess the innovativeness of insurance companies.
- Keywords
-
JEL Classification (Paper profile tab)G22, O31
-
References43
-
Tables3
-
Figures4
-
- Figure 1. Dynamics of the gross insurance premiums to GDP ratio in Ukraine in 2010–2019
- Figure 2. Dynamics of some Ukrainian insurance market’s indicators in 2015–2019
- Figure 3. Dynamics of some performance indicators of PZU Ukraine in 2016–2019
- Figure 4. Dynamics of some innovation indicators of PZU Ukraine in 2016–2019
-
- Table 1. Types of insurance companies’ process innovations
- Table 2. Indicators for assessing the innovation of an insurance company
- Table A1. Product and process innovations of TOP10 Ukrainian risk insurance companies (as of mid-2020)
-
- Arun Kumar N., & Yellampalli S. (2018). Disruptive Innovation for Auto Insurance Entrepreneurs: New Paradigm Using Telematics and Machine Learning. In D. Khajeheian, M. Friedrichsen, & W. Mödinger (Eds), Competitiveness in Emerging Markets. Market Dynamics in the Age of Disruptive Technologies (pp. 555-568). Switzerland, Cham: Springer International Publishing.
- Chesbrough, H. W. (2003). Open Innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press.
- Chichilnisky, G. (1996). Financial Innovation in Property Catastrophe Reinsurance: The Convergence of Insurance and Capital Markets. Risk Financing Newsletter, 13(2), 1-8.
- Epetimehin, F. M. (2011). Achieving Competitive Advantage in Insurance Industry: The Impact of Marketing Innovation and Creativity. Journal of Emerging Trends in Economics and Management Sciences (JETEMS), 2(1), 18-21.
- Fasnacht, D. (2009). Open Innovation in the Financial Services: Growing Through Openness, Flexibility, and Customer Integration. Berlin: Springer-Verlag.
- Frame, W. S., & White, L. J. (2004). Empirical Studies of Financial Innovation: Lots of Talk, Little Action? Journal of Economic Literature, 42(1), 116-144.
- Gubler, Z. J. (2011). The Financial Innovation Process: Theory and Application. Delaware Journal of Corporate Law (DJCL), 36(1), 55-119.
- Hemphill, T. A. (2019). The Title Insurance Industry: Infusing Innovation and Competition. Business Economics, 54, 177-181.
- Hilker, C. (2016). Proceedings from the 4th International Conference Innovation Management, Entrepreneurship and Corporate Sustainability. Czech Republic, Prague.
- Johne, A., & Davies, R. (2000). Innovation in Medium-Sized Insurance Companies: How Marketing Adds Value. International Journal of Bank Marketing, 18(1), 6-14.
- Kneysler, O., Kryvytska, O., Shupa, L., & Huzela, I. (2019). Assessment of the competitive environment of the health insurance market. Problems and Perspectives in Management, 17(2), 541-549.
- Kolodiziev O. M. (2013). Formuvannia bahatorivnevoi systemy pokaznykiv finansuvannia innovatsiinoi diialnosti [Formation of a multilevel system of indicators of financing of innovative activity]. Current economic problems – Aktualni problemy ekonomiky, 8, 32-44. (In Ukrainian).
- Kolodiziev, O., Chmutova, I., & Bilyaeva, V. (2016). Selecting a Kind of Financial Innovation According to the Level of a Bank’s Financial Soundness and Its Life Cycle Stage. Banks and Bank Systems, 4, 40-49.
- Kozmenko S., & Roienko V. (2016). Ensuring financial inclusion through insurance companies and credit unions. Insurance Markets and Companies, 7(1), 6-10.
- Lado, N., & Maydeu-Olivares, A. (2001). Exploring the Link between Market Orientation and Innovation in the European and US Insurance Markets. International Marketing Review, 18(2), 130-145.
- Laster, D., & Raturi, M. (2002). What Drives Financial Innovation in the Insurance Industry? Journal of Risk Finance, 3(3), 36-47.
- Lerner, J. (2010). The litigation of financial innovations. The Journal of Law and Economics, 53(4), 807-831.
- Llewellyn, D. T. (1992). Financial Innovation: a Basic Analysis. In H. E. Cavanna (Ed.), Financial Innovation (pp. 17-33). London: Routledge.
- Mamedova, E. R. kizi (2018). Assessment of the competitiveness of tourist insurance in insurance companies. Development Management, 16(3), 8-17.
- Mensch, G. (1979). Stalemate in Technology: Innovations over Come the Depression. Massachusetts, Cambridge: Ballinger Publishing Company.
- Mention, A.-L., & Torkkeli, M. (Eds.) (2014). Innovation in Financial Services: A Dual Ambiguity. Newcastle upon Tyne: Cambridge Scholars Publishing.
- National Bank of Ukraine. (2020a). Nahliadova statystyka: pokaznyky diialnosti nebankivskykh ustanov [Supervisory statistics: performance indicators of non-banking institutions]. (In Ukrainian).
- National Bank of Ukraine. (2020b). Rezultaty analizu zvitnosti strakhovykiv za pershe pivrichchia 2020 roku [The results of the analysis of insurers’ reporting for the first half of 2020]. (In Ukrainian).
- National Bank of Ukraine. (2020с). Stratehiia rozvytku fintekhu v Ukraini do 2025 roku [Strategy for the development of FinTech in Ukraine until 2025]. (In Ukrainian).
- Natorina A. (2018). Fundament tsyfrovoi transformatsii biznesu [The foundation of digital business transformation]. Upravlinnia rozvytkom – Development Management, 1, 55-60. (In Ukrainian).
- OECD/Eurostat (2018). Oslo Manual 2018: Guidelines for Collecting, Reporting and Using Data on Innovation, 4th Edition. The Measurement of Scientific, Technological and Innovation Activities. Luxembourg: OECD Publishing, Paris/Eurostat.
- Pikus, R. V., & Zakolodiazhnyi, V. O. (2016). Innovatsiini kanaly zbutu strakhovykh produktiv u sferi osobystoho strakhuvannia [Innovative Sales Channels of Insurance Products in the Field of Personal Insurance]. Investytsii: praktyka ta dosvid – Investments: Practice and Experience, 7, 71-75. (In Ukrainian).
- Prigozhin, A. I. (1989). Novovvedeniya: stimuly i prepyiatstviya (Sotsialnyye problemy innovatiki) [Innovation: incentives and obstacles (Social problems of innovation)]. Moskva: Politizdat. (In Russian).
- Prokopchuk, O., Nesterchuk ,Yu., Tsymbalyuk, Yu., & Rolinskyi, O. (2019). Current trends in agricultural insurance market operation in Ukraine. Problems and Perspectives in Management, 17(3), 57-75.
- Prymostka, O. (2018). Life insurance companies marketing strategy in the digital world. Insurance Markets and Companies, 9(1), 70-78.
- PZU Ukraine Insurance Company (2020). Finansovi pokaznyky [Financial indicators]. (In Ukrainian).
- Salaichuk, O. (2017). Innovatsiini tekhnolohii v avtotransportnomu strakhuvanni [Innovative Technologies in Motor Transport Insurance]. Visnyk Kyivskoho natsionalnoho torhovelno-ekonomichnoho universytetu – Visnyk of Kyiv National University of Trade and Economics, 4, 124-138. (In Ukrainian).
- Schueffel, P. E., & Vadana, I-Iu. (2015). Open Innovation in the Financial Services Sector – a Global Literature Review. Journal of Innovation Management, 3(1), 25-48.
- Shkolnyk, I., Bondarenko, E., & Balatskyi, I. (2019). Financial risks of the stock market: opportunities and specifics of their insurance. Insurance Markets and Companies, 10(1), 26-35.
- Śliwiński, A., Karmanska, A., & Michalski, T. (2015). Insurance Innovation Assessment Model: Process Based Approach. Proceedings from: Managing Intellectual Capital and Innovation for Sustainable and Inclusive Society: MakeLearn and TIIM Joint International Conference (pp. 1243-1249). Bari, Italy.
- State Statistics Service of Ukraine (2018). Naukova ta innovatsiina diialnist Ukrainy (statystychnyi zbirnyk) [Scientific and innovative activity of Ukraine (statistical collection)]. Kyiv: Avhust Treid. (In Ukrainian).
- State Statistics Service of Ukraine. (2020). Ekonomichna statystyka [Economic statistics]. (In Ukrainian).
- Stoeckli, E., Dremel, Ch., & Uebernickel, F. (2018). Exploring Characteristics and Transformational Capabilities of InsurTech Innovations to Understand Insurance Value Creation in a Digital World. Electronic Markets, 28, 287-305.
- The Verkhovna Rada of Ukraine (2020). Zakon Ukrainy “Pro vnesennia zmin do deiakykh zakonodavchykh aktiv shchodo udoskonalennia funktsii iz derzhavnoho rehuliuvannia rynkiv finansovykh posluh” [Law of Ukraine “On Amendments to Certain Legislative Acts Concerning the Improvement of Functions on State Regulation of Financial Services Markets”].
- Tretiak, D. D. (2017). Perspektyvy vprovadzhennia innovatsii v osobystomu strakhuvanni na prykladi zarubizhnykh krain [Prospects for the Introduction of Innovations in Personal Insurance on the Example of Foreign Countries]. Visnyk Kyivskoho natsionalnoho universytetu imeni Tarasa Shevchenka. Ekonomika – Bulletin of the Taras Shevchenko National University of Kyiv. Economy, 5, 50-58. (In Ukrainian).
- Vermeulen, P., & Raab, J. (2007). Innovations and Institutions. An Institutional Perspective on the Innovative Efforts of Banks and Insurance Companies. London: Taylor & Francis.
- Vnukova, N., Kavun, S., Kolodiziev, O., Achkasova, S., & Gontar, D. (2020). Indicators-Markers for Assessment of Probability of Insurance Companies Relatedness in Implementation of Risk-Oriented Approach. Economic Studies, 32(1), 151-173.
- Yehorycheva, S. B. (2015). BSC as control and evaluation instrument of bank’s innovation strategies. Financial and Credit Activity: Problems of Theory and Practice, 18(1), 10-18.