EJPAU 2010. Kozak S. CONSOLIDATION AND EFFICIENCY OF THE NON-LIFE INSURANCE SECTOR IN POLAND

Electronic Journal of Polish Agricultural Universities (EJPAU) founded by all Polish Agriculture Universities presents original papers and review articles relevant to all aspects of agricultural sciences. It is target for persons working both in science and industry,regulatory agencies or teaching in agricultural sector. Covered by IFIS Publishing (Food Science and Technology Abstracts), ELSEVIER Science - Food Science and Technology Program, CAS USA (Chemical Abstracts), CABI Publishing UK and ALPSP (Association of Learned and Professional Society Publisher - full membership). Presented in the Master List of Thomson ISI.

2010
Volume 13
Issue 1

Topic:

Economics

ELECTRONIC
JOURNAL OF
POLISH
AGRICULTURAL
UNIVERSITIES

Kozak S. 2010. CONSOLIDATION AND EFFICIENCY OF THE NON-LIFE INSURANCE SECTOR IN POLAND, EJPAU 13(1), #03.
Available Online: http://www.ejpau.media.pl/volume13/issue1/abs-03.html

CONSOLIDATION AND EFFICIENCY OF THE NON-LIFE INSURANCE SECTOR IN POLAND

Sylwester Kozak
Faculty of Economic Sciences, Warsaw University of Life Sciences - SGGW, Poland

ABSTRACT

The paper examines the level of the cost efficiency
of the Polish non-life insurance industry in the period 2003-2007. The analyzed
period characterizes intensive restructuring due to the preparation and first
years of operations on the common pan-European financial market. Relatively low
density and penetration of insurance services in Poland were important
motivations for foreign insurance companies to enter the Polish market. The 80%
share of foreign capital in the Polish insurance sector resulted in reduction
of dominance of the main state-owned insurer and the increase of competition on
the Polish non-life insurance market. The examination was conducted on the
group of 34 Polish insurers based on their annual data provided by the Polish Insurance
Chamber. The stochastic frontier analysis showed that during this period the
average level of cost efficiency was decreasing from 49% to 43%. The regression
analysis indicates that operational costs have negative impact on the level of efficiency.
Additionally firms lowered their efficiency in a result of reduction of the
market concentration and increase of competition, which is in accordance with
the Structure- Conduct-Performance (SCP) paradigm. Higher acquisition costs are
expected to be responsible for the lower level of cost efficiency. Economic
downturn is expected to have a positive impact on the efficiency. No
correlation between efficiency and insurer’s size could indicate an absence of
scale effects in the non-life insurance sector in Poland.

Key words: efficiency, consolidation, non-life insurance sector, financial stability, Poland.

Sylwester Kozak
Faculty of Economic Sciences, Warsaw University of Life Sciences - SGGW, Poland
161 Nowoursynowska Str., 02-787 Warsaw, Poland
email: sylwester_kozak@sggw.pl

Responses to this article, comments are invited and should be submitted within three months of the publication of the article. If accepted for publication, they will be published in the chapter headed 'Discussions' and hyperlinked to the article.