INSURANCE COMPANIES INSOLVENCY PROBABILITY MODELLING

Keywords: insurance organization, dynamic model, probability of bankruptcy, inflation, rate of interest.

Abstract

The article is dedicated to problems of developing scientific and methodological foundations as well as creating an dynamic mathematical model of insurance company solvency (bankruptcy probability) considering interest rate and inflation ratio.
The study used the general scientific and special methods such as: the method of critical analysis, scientific abstraction and generalization of scientific expertise of recent theoretical studies, system-integrated approach, method of dynamic mathematical modeling.
Elaboration of dynamic mathematical model of bankruptcy probability modelling considering inflation (as inflation has negative impact on all aspects of insurance business including insurance reserves) and rate of interest. The peculiarities of insurance companies investment activity have been defined. The estimation of insurance premium that ensures abequate insurance fund value formation, i.e. insurance company solvency formation has been performed. Insurance tariff and supplement value correspondent to defined probability of insurance company bankruptcy have been defined.
Methodological approaches of insurance companies solvency (bankruptcy probability) modelling were further developed. The dynamic mathematical model of bankruptcy probability considering inflation and rate of interest has been proposed.
Theoretical study was developed to the level of specific techniques and suggestions for improvement of the estimation and prognozing of insurance companies solvency and could be used in strategic, current and operational planning. A comprehensive methodology of supplement estimation allows to respond to the changing market situation by changing the values of insurance tariffs.

References

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Published
2020-12-30
How to Cite
КysiloyvaІ. Y. (2020). INSURANCE COMPANIES INSOLVENCY PROBABILITY MODELLING. Bulletin of Zaporizhzhia National University. Economic Sciences, (4 (48), 103-107. Retrieved from http://journalsofznu.zp.ua/index.php/economics/article/view/1781