STATISTICAL ANALYSIS OF LIFE INSURANCE COMPANY’S EXPENSES
Keywords:expenses, insurance payments, life insurance company, accumulating expenses, agency remuneration, administrative expenses
The article defines the types of expenses in life insurance companies. The author put an emphasis on the distinction of priority expenses in modern economic conditions. It was found that in the practical sphere of life insurance companies two groups of expenses occupy dominant position: insurance payments, insurance indemnities and redemption amounts; operating expenses, other and extraordinary expenses. The author notes that constant and even increase of expenses is a natural phenomenon for the developing companies who strive to gain new market segments.
The domestic life insurance market is justified by insignificant annual growth of insurance payments, since the payout period has not yet come due to the long-term nature of life insurance contracts. The number of expired life insurance contracts will grow every year, allowing the companies to predict the growth of insurance payments in the future. The author notes a positive trend in redemptive amounts decrease, proving that the number of prematurely terminated life insurance contracts is decreasing on the market.
In order to ensure that insurance payments are guaranteed to their clients, life insurance companies immediately began to accumulate funds on their accounts in the form of life insurance reserves. It was revealed that in the expenditure structure, the expenses related to the insurance contracts’ conclusion and prolongation (accrued expenses) were dominating. This proves that life insurance companies have chosen well-grounded insurance activities, focusing on winning a wider range of potential insurers.
Attention is also paid to the fact that in recent years in Ukraine, more than 90% of all expenses related to the conclusion and prolongation of life insurance contracts were the costs of agency remuneration. To win new market segments, life insurance companies account for up to 10% of all sales costs for advertising and marketing.
It is noted that life insurance companies in the insurance market of Ukraine more closely adhere to the policy of conquering the market, rather than lobbying their own interests, which is confirmed by the reduction of administrative costs.