PROBLEMS AND RESTRAINT FACTORS OF INVESTMENT ACTIVITY OF INSURANCE COMPANIES - Наукові конференції
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PROBLEMS AND RESTRAINT FACTORS OF INVESTMENT ACTIVITY OF INSURANCE COMPANIES

23.11.2018 13:59

[Секція 1. Економіка, організація і управління підприємствами, галузями, комплексами]

Автор: Denisenko M.P., Doctor of Economics, Professor of the Department of Business Economics, Kyiv National University of Technology and Design; Tokacheva A.V., student, Kyiv National University of Technology and Design


Insurance is one of the branches of financial and economic activity, which is developing at the fastest pace. The activities of insurers acts as the most important stabilizer of the process of social reproduction in a market economy.

At present, investment activity of insurance companies remains insufficiently developed, and while it serves only to ensure the effective functioning of the company within the regulatory framework, the requirements of which are established norms and directions of investment insurance reserves. Nevertheless, due to well-organized investment activity, the quality of the services provided by the insurance company increases, as well as its position in the insurance services market is determined.

In view of the above, there is no doubt, that the study of the problem aspects of insurance companies' investment activity in the conditions of the instability of the economic and political situation in Ukraine is problematic.

Insurance investment activity is the activity of insurance companies, which involves investing their own and borrowed funds now and earning income in the future. Such activities are regulated at the national level by the Law of Ukraine «On Investment Activity» [1], which regulates the implementation of investment activities in general on the territory of Ukraine of all business entities, as well as the requirements of the Law «On Insurance» [2] and other normative acts, that regulate the rules for placing insurance reserves.

In recent studies concerning the problems of the development of the insurance market of Ukraine, in particular І.І. Rekunenko S.V. Chornaya [3], V.P. Bratyuk [4], identified the following problems, which are the reasons for the insufficient development of investment activity of Ukrainian insurers:

- imperfection of legal regulation in the field of insurance, incomplete compliance of legislation with European standards;

- rigid state regulation of the placement of insurance reserves;

- low level of capitalization of domestic insurers and frequent bankruptcy of issuers;

- undeveloped stock market and lack of reliable financial instruments for effective investment policy;

- high investment risks and low level of corporate governance;

- lack of practice in developing effective investment strategies;

- opacity of the insurance market;

- low level of integration into the global financial system [3, p. 667-672; 4, p. 182-185].

The Ukrainian insurance market is characterized by a situation, where insurance companies are mainly engaged in insurance activities and much less in investment activity.

A number of deterrent factors are affected by these. Experts' research has shown, that among the deterrent factors for the development of investment activity of insurance companies, the negative impact (about 70%) is primarily due to political and economic instability in the country, confirming why there is a general uncertainty about the place and role of insurance in Ukrainian society and inconsistency regulatory policy in the field of insurance. It also slows down the development of investment activities by insurers with a limited list of investment instruments, that could be invested by insurance companies (47.1% of experts).

Significant influence on the investment development of insurers is also due to excessive regulation of the market (35.3%), high riskiness of investments and their low profitability (35.3%), corruption (29.4%). However, the percentages of these factors are constantly rising and at the present stage require more attention from experts and legislatures. Such factors as lack of specialists, low profitability of investments and insufficient amount of information affecting investment decisions are almost the same degree of influence (more than 17%). Relatively low interest rates have low liquidity of investment objects (11.8%) and conflicts in the legislation (about 6%).

The above-mentioned problems and considered restraint factors lead to work to overcome existing problems and create favorable conditions for investment activity to improve the quality of insurance services and investment potential of insurers. This will help stabilize the industry, create competition for banking institutions, and provide the economy with long-term investment.

Literature

1. Про інвестиційну діяльність [Електронний ресурс]: закон України від 18.09.1991 № 2059-VIII-ВР зі змінами та доповненнями N 2095-VIII (2095-19) від 08.06.2017 р. – Режим доступу: http://zakon.rada.gov.ua/laws/show/1560-12

2. Про страхування [Електронний ресурс]: закон України від 07.03.1996 № 85/96-ВР зі змінами та доповненнями N 2095-VIII ( 2095-19) від 08.06.2017. – Режим доступу: http://zakon.rada.gov.ua/laws/show/1560-12

3. Рекуненко І.І. Особливості інвестиційної діяльності страхових компаній / І.І. Рекуненко, С.В. Чорна // Економіка і суспільство. – 2017. – № 8. – С. 667-672.

4. Братюк В.П. Сучасні аспекти інвестиційної діяльності страхових компаній в умовах фінансової кризи / В.П. Братюк // Науковий вісник Херсонського державного університету. – 2014. – Вип. 9 Част. 3. – С. 182-185.



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