European Insurance Markets in the Face of the 2007 Financial Crisis

Abstract

This study compares the development of insurance markets in countries such as Portugal, Italy, Greece and Spain to mature markets in countries such as the UK and Germany during the 2007 financial crisis. Markets are examined from the product innovation perspective. The market in a country is assessed using taxonomic measures, such as distance and similarity. Markets are described by a set of features divided into five groups: market structure, technical sphere, finance and investment, effectiveness, and product. The measures are calculated at two points in time, 1997 and 2010. The data were gathered from publications of the World Bank, European Union Commission (statistics offices), National Polish Bank and insurance associations. The financial crisis has slowed the speed of market development and influenced other spheres. In countries like Greece and Portugal, progress was even slower than in post-Soviet states, like Poland. The crisis has not imposed structural changes within the selected markets and the influence of the crisis is visible. The sectors were not very innovative, particularly in the product sphere. The literature on the influence of the crisis on insurance is contradictory. This study’s novelty is that it applies multidimensional analysis when comparing insurance-market innovativeness and development.

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“…They summarize their experience from the trend of premium income growth over the years, predict the market from the innovation of various new types of insurance and evaluate the risk level from the relationship between the insurance market and other markets such as the financial market. Some of the cases have become very classic, such as whether or how foreign investment affects the development of insurance markets in EU-15 countries, the development of European insurance markets during the 2007 financial crisis, how COVID-19 has impacted China's insurance market, Flood Insurance Market Penetration and Expectations of Disaster Assistance [3][4][5][6]. The insurance industry will continue to push forward towards institutionalization, internationalization, legalization, marketization, integration and specialization, and eventually achieve big and strong by following a good and fast speed.…”