Technical reserves in insurance and Slovak insurance market

Abstract

Currently, there are 37 insurance companies and branches of foreign insurance companies operating in Slovakia. The impact on results of operations of insurance companies have obligations to clients and investment activities. Insurance works by creating reserves, which are on the one hand intended to eliminate the negative financial consequences and the fulfillment of the obligations and, on the other hand, to realize their own investment policy. Control mechanism based on the establishment of technical provisions must guarantee, if necessary, their availability.Technical provisions in insurance are used as mathematical and statistical methods for calculating basic characteristics. Parametric trend estimation uses the method of least squares known from regression analysis. The starting point of the analysis is a set of data published by the National Bank of Slovakia for the period of 2004-2014. Identification of the trend in the technical insurance in the area of life and non-life insurance in the Slovak Republic for 2004-2014 has been realised taking into consideration three basic types of time series (linear, quadratic and exponential) as well as basic characteristics of the technical insurance were found out in order to create a model for the linear trend up to 2017. Prognoses of the technical insurance in life and non-life insurance for the 2013-2017 have been elaborated. The results show that profitability of the insurance sector has not fundamentally changed lately and remained sufficient. The solvency of the insurance companies increased significantly due to the profits of re-evaluation of the commercial papers in the portfolio for sales. In life insurance the growth of technical premium continues, although its structure has changed. In non-life insurance, negative trends continued in car insurance. It can be concluded that as a result of higher competitiveness, the insurance shows a downward trend and the profitability in the insurance sector is lower, however, insurance premiums remain sufficient.