The domestic insurance market began to develop rapidly with the beginning of the demonopolization of the economy. Today, the functioning of a market economy directly depends on the content of the insurance market, its level of dynamism and development. The significance of the impact of the insurance system on the economy causes the need for the state to regulate insurance activity and control it.
Insurance market concept
The insurance market is a special socio-economic environment, a certain sphere of financial relations, where insurance protection is the object of sale, while demand and supply are formed on it. It can also be defined as a form of organization of monetary relations for the distribution and formation of an insurance fund in order to provide insurance coverage for the population, or as a combination of insurers involved in the provision of a number of related services.
The foundations of the insurance market include a free economy, the presence of competition, free pricing, a variety of forms of ownership, freedom of choice, the emergence of new types of insurance services, and more. At the same time, the insurance market cannot take place if at least one of the following conditions is not met:
- the presence of the company's need for insurance services (demand);
- the presence of insurers who are able to satisfy demand (supply).
Due to these conditions, the insured market and the insurer market stand out. In general, the insurance market is an integrated system that includes a variety of structural components. Its main subjects include the insurance company (where the formation of the insurance fund and its use are carried out), reinsurance companies, associations of insurers, intermediaries of the insurer, etc.
A specific product that is offered is a specific insurance service that is presented on the basis of a contract or law.
The structure of the insurance market and its types
The structure of the insurance market can be characterized in various aspects - territorial, institutional and industry. So, on a territorial basis, the market structure is characterized by local, national and world insurance markets; by industry - personal, property; institutional - by joint-stock, state, private, corporate insurance companies.
External environment and internal content of the insurance market
The insurance market is a set of insurance organizations, a dynamic system where its individual components (participants in the insurance market) constantly interact with each other, forming a single whole.
The external environment of the market can be called a system of forces that surround the internal structure of the market and affect it. In the conditions of such an environment, the insurer conducts its work, has a certain impact on the external environment. Among the main elements of the external environment that the insurer influences are market demand, innovations in insurance, the insurer's infrastructure, and competition.
The internal system, in turn, includes insurance products, sales organization and demand generation, the insurance company's own infrastructure, a flexible tariff system, and the financial, material and labor resources of the insurer.
Thus, it can be concluded that the insurance market is a complex system that could not function without any one component. Participants of insurance, forming the supply and demand for the services of insurance companies, support its work in a market economy, so that insurance becomes more popular and necessary every year.