Assessing the Activities of Insurance Companies Due to the Disease of Private Pension

Abstract

The purpose is to develop a methodological approach and confirm the hypothesis of low risk of the entire market of life insurance companies in Ukraine according to the financial statements to ensure private pensions. Subject – methodological support for risk assessment of insurance companies for life insurance according to the financial statements to ensure private pension. Object – the process of assessing the risk of the activities of insurance companies for life insurance. Research base – the whole market of insurance companies for life insurance of Ukraine, which provide services for non-state pension. The adaptation method of integral risk index (hereinafter – IRI), which allows to divide insurance companies into four zones, was used in the study: catastrophic IRI; critical IRI; acceptable IRI; risk-free IRI. Each zone is determined by the level of compliance of the insurance company’s performance indicators with the regulatory limits in Ukraine. A complete list of life insurance companies providing private pension provision in Ukraine was selected as a study. The method is based on a score on T. Saaty’s scale, which allows determining the rank of the entities in the insurance market according to their risk. All evaluated life insurance companies in the Ukrainian private pension market reliably build a risk management strategy which allows to assess this market with low risk. In order to have risk-free activity, it is necessary for the companies of allowable risk zone to strengthen some indicators, namely to increase the appropriate level of investment and balance the levels of accounts payable and receivable. The obtained results of establishing the risk levels of all life insurance companies which provide private pension provision through the definition of IRI allow to form an individual risk assessment of the insurance company and develop measures for prevention and counteraction of risks, establish general trends of the insurance market development from the private pension scheme of the country by means of the detailed assessment of particular indicators. The practical effectiveness of the suggested experimental approach is potential and it can be tested in the activities of other insurance companies, while new indicators of changes in the regulation system of the Ukrainian insurance market as to the suggested algorithm will be the basis for determination of risk zones which are adapted for the changes. The scientific novelty is to develop a methodological approach to risk assessment of life insurance companies to provide private pensions, which consists in a systematic combination of evaluation stages using the proposed financial indicators, how to measure and integrate them, the formation of the proposed scale risk and its interpretation, which allows for constant monitoring of the level of risk of the entire market of life insurance companies to provide private pensions on the basis of public financial reporting. This approach allowed to assess the risk of all life insurance companies in the market of private Ukrainian pension scheme that proved the low level of risk in this market which is positive for consideration of its development strategies.