DETERMINANTS OF PROFITABILITY OF NON-LIFE INSURANCE[sup]1[/sup] COMPANIES IN POLAND DURING INTEGRATION WITH THE EUROPEAN FINANCIAL SYSTEM
Journal Title: ELECTRONIC JOURNAL OF POLISH AGRICULTURAL UNIVERSITIES - Year 2011, Vol 14, Issue 1
Abstract
The integration process of the Polish financial system with the European markets significantly affected profitability of the nonlife insurance sector in Poland. During this period, the level of invested capital and number of companies controlled by foreign investors has increased, as well as the share of premiums collected by these companies in the total premiums of the sector. The period of financial integration was characterized by a significant improvement of financial performance of the sector, as well as profitability of its insurance and investment activities. To check determinants of the profitability tests, were conducted on a panel of 25 non-life insurance companies for the period of 2002–2009. For estimation a regression model with elimination of the impact of heteroscedasticity and autocorrelation in the analyzed sample was used. The results indicate that the reduction in the share of motor insurance in the portfolio, with simultaneous increase of other types of insurance, has a positive impact on profitability and cost-efficiency of insurance companies. However, offering too broad spectrum of classes of insurance negatively impacts its profitability and cost efficiency. Companies improve profitability and cost efficiency with an increase of their gross premiums and decrease of total operating expenses. Additionally increases of the GDP growth and the market share of foreign owned companies positively impact profitability of non-life insurance companies during the integration period.
Authors and Affiliations
Sylwester Kozak
Keywords
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