Academy Of Economic Studies Of Moldova

Chişinău 2003 Contents Theme 1. 1.1. 1.2. 1.3. Theme 2. 2.1. 2.2. 2.3. 2.4. Theme 3. 3.1. 3.2. 3.3. 3.4. Theme 4. 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. Theme 5. 5.1. 5.2. 5.3. 5.4. Theme 6. 6.1. 6.2. 6.3. 6.4. 6.5. Theme 7. 7.1. 7.2. 7.3. 7.4. Theme 8. 8.1. 8.2. 8.3. 8.4. 8.5. Theme 9. 9.1. 9.2. 9.3. 9.4. 9.5. 9.6.

Economic Essence, Functions and Classification of Insurance……………………………….… Economic essence and functions of insurance………………………………………………….. Classification of insurance……………………………………………………………………… Types of insurance funds………………………………………………………………………... Juridical Aspects of Insurance Activity……………………………………………………….… Forms of insurance activity……………………………………………………………………... State control over the insurance activity………………………………………………………... Forms of control over insurance companies’ activities…………………………………………. The core and main elements of the contract of insurance………………………………………. Insurance Marketing…………………………………………………………………………….. The essence of the insurance marketing………………………………………………………… Methods of promotion of insurance services……………………………………………………. Insurance middlemen……………………………………………………………………………. The essence of the insurance market……………………………………………………………. Insurance Market in Foreign Countries…………………………………………………………. Insurance development tendencies on the international level…………………………………... The Insurance Market of the USA………………………………………………………………. The Insurance Market of Great Britain…………………………………………………………. The Insurance Market of Germany……………………………………………………………… The Insurance Market of Switzerland…………………………………………………………... The Insurance Market of Russia………………………………………………………………… The Insurance Market of Moldova……………………………………………………………… Property Insurance………………………………………………………………………………. Physical persons’ property insurance…………………………………………………………… Juridical persons’ property insurance…………………………………………………………… The conclusion of insurance contract…………………………………………………………… The measuring of damage and compensation…………………………………………………... International Practice of Transport Insurance…………………………………………………... Motor-vehicle insurance………………………………………………………………………… Vessel insurance………………………………………………………………………………… Marine freight insurance………………………………………………………………………… Containers insurance……………………………………………………………………………. Aircraft insurance……………………………………………………………………………….. The Insurance of Responsibility on the International Level……………………………………. The insurance of the civil responsibility of car-owners………………………………………… The insurance of the civil responsibility of carriers to passengers……………………………… The insurance of the civil responsibility of the enterprises – of the sources of high danger…… The insurance of professional responsibility……………………………………………………. Economic and Political Risks Insurance………………………………………………………... Commercial risks insurance…………………………………………………………………….. Insurance against losses due to production interruptions……………………………………….. The insurance of new technique and technology risks………………………………………….. Political risks insurance…………………………………………………………………………. Export credits insurance………………………………………………………………………… Personal Insurance………………………………………………………………………………. Life insurance…………………………………………………………………………………… Additional pension insurance…………………………………………………………………… Accident insurance……………………………………………………………………………… Compulsory insurance of passengers…………………………………………………………… Voluntary medical insurance……………………………………………………………………. Medical insurance of persons going abroad……………………………………………………..

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Theme 10. Reinsurance……………………………………………………………………………………... 10.1. The essence and the meaning of reinsurance…………………………………………………… 10.2. Types of reinsurance contracts………………………………………………………………….. 10.3. Proportional reinsurance………………………………………………………………………… 10.4. Disproportional reinsurance…………………………………………………………………….. Bibliography……………………………………………………………………………………………………

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Theme 1. Economic Essence, Functions and Classification of Insurance. 1.1. Economic essence and functions of insurance. 1.2. Classification of insurance. 1.3. Types of insurance funds. 1.1. Economic essence and functions of insurance. Insurance is a complex of economic relations associated with forming the insurance fund at the expense of the insurers with the purpose of covering the loses caused by some unfavourable events, stipulated in the contract. Characteristic features of insurance: 1) Premiums are paid by policyholders up to the definite rates and the funds are formed for the account of premiums. 2) The funds are accumulated in special organisations – insurance companies. 3) The funds are only distributed to the fund investors. 4) The funds are used only for particular purposes. 5) The funds are used according to the rates, stipulated beforehand, that is, when joining the insurance relations the insurer knows what compensation he might get for an incident. 6) The funds are distributed only within stated periods of time. 7) Insurance is necessary only when somebody is interested in it, i.e., when some unforeseen circumstances can really occur. 8) The events must have features of probability or fortuity, when the occurrence of the event is not obvious or doesn’t depend on the will of the insurer.

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9) Insurance is based on mutual and solidary distribution of losses among all participants of insurance. Functions of insurance: 1) The core of risk and redistributing function is that the insurance funds are redistributed among the participants due to concluding the insurance agreement and consequence of insurance events. 2) The core of preventive function is that insurance companies carry out financing of unfavourable events. For this the insurance company forms a set of preventive actions for the account of allocations. 3) The core of saving function is that a sum of money is saved by means of life insurance and is connected with the defence of the achieved income. 4) The core of controlling function is that the insurance companies control the activities of their clients concerning their observing of safety measures. 1.2. Classification of insurance. A classification of insurance is the distribution of insurance services according to the groups defined by some common signs. There exist classifications based on forms and on branches of insurance. Classification based on forms of insurance. Insurance is carried out in two forms: obligatory and voluntary. Obligatory forms are defined by the following principles: 1) The obligatory insurance is defined by the law, according to which the underwriter must insure the corresponding objects, and the insurer must take necessary insurance payments. The law usually stipulates all necessary terms and the order of carrying out the given kind of insurance. 2) For the overall obligatory insurance indicated by the law, the insurance agencies carry out annual registration of the insured objects, make payments and charge premiums in the stipulated terms.

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3) Automatic insurance covering of the objects is indicated by the law. The insurer mustn’t announce the appearance of the insured objects to the insurance company. The given property is automatically included in the field of insurance. It will be automatically registered and the insurer will be charged to pay the fee. 4) The effect of the obligatory insurance does not depend on the premiums. In cases when the insurer didn’t pay the insurance premiums, they are charged by the order of the court. In case of loss of or damage to the insured property not covered by insurance premiums the insurance compensation is due to payment out of the insurance debts. The undue premiums are imposed with a fine. 5) Permanent obligatory insurance. It works during the whole period, within which the insurer uses the insured property. Only unpractical and dilapidated property doesn’t fall under insurance coverage. The effect of the insurance doesn’t stop when the property is passed on from one insurer to another. It loses its effects only in case of loss of the property. In case of personal insurance an overall automation comes into effect. But it has a strictly stipulated period of time and is completely dependent on insurance premiums (for example, obligatory insurance of passengers). Kinds of obligatory insurance in Moldova: - insurance of passengers against accidents; - insurance of military men; - obligatory medical insurance; - car owners’ responsibility insurance; - carriers’ responsibility insurance. Voluntary insurance is based on observing the following principles: 1) Voluntary insurance is effective under the law about insurance and under voluntary authority. The law defines the objects that fall under insurance and stipulates the general conditions of insurance. The specific terms are regulated by the insurance rules.

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2) Voluntary participation in insurance is characteristic only for the insurers. The underwriter is not authorised to refuse to insure the object if the wishes of the insurer do not contradict the conditions of insurance. The given principle guarantees concluding the contract on the demand of the insurer. 3) Selective voluntary insurance is due to the fact that not all insurers wish to participate in it. Besides, there exist some restrictions for making contracts. 4) Voluntary insurance always has some time limits. For this end, the beginning and the end of the period of insurance are specially stipulated in the contract. Voluntary insurance may become permanent only by making the second contract for a new period. 5) Voluntary insurance is effective only after paying the insurance premium. The contract comes into effect after paying a single or the first insurance premium. Non-payment of the next premium of long-term insurance brings to the cessation of the contract. The voluntary insurance coverage depends on the wishes of the insurer. Under the property insurance the insurer may define the size of the insurance sum within the limits of the property evaluation. Under the personal insurance the insurance sum is defined by the contract of the parties. Classification according to the branches. Insurance is carried out in the next branches: - property insurance; - personal insurance; - responsibility insurance in the face of the third person; - insurance of economic risks. Property insurance is the branch of insurance, where the object of insurance is the property that can be damaged. Depending on the forms of property and the categories of insurance there exists: the property of juridical persons, physical persons and agricultural enterprises.

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Personal insurance is the branch of insurance in which the objects of insurance are life, health and ability of a person to work. There are life insurance, insurance against accident and medical insurance. Liability insurance is the branch of insurance the object of which is the responsibility in the face of the third person, which may suffer from the actions of the insurer. There are insurance of responsibility of car owners, insurance of professional responsibility, etc. Insurance of economic risks is the branch of insurance, the objects of which are the results of entrepreneur’s activity. There may be defined the insurance of the risks against direct and indirect losses. 1.3. Types of insurance funds. Insurance funds are a fair necessity, they perform the functions of safe keeping and continuity of production of material goods for people. Functions of insurance funds: 1) Preventing the insurance cases. 2) Suppression and liquidation of the event covering losses. Depending on the degree there are three means of forming the insurance funds: 1) centralised; 2) decentralised (self-insurance); 3) insurance. Under centralised form the insurance fund is formed by the state. Its core is that the state allocates a certain portion of its resources and keeps it for extraordinary cases of destructive consequences. This fund may be created both in material and monetary forms. Negative moment: sufficient material and financial resources are drawn from inventory reserves. It is impossible to provide big reserves.

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Positive moment: it doesn’t depend on wishes and potentials of final users of funds. It is concentrated in one owner’s hands and prevents its using for other purposes. Under self-insurance a reserve fund is formed by any juridical or physical person. Self-insurance may be carried out both in material and monetary forms. Negative moment: the volume of possible losses is unknown, neither is the needed size of the fund. Positive moment: a quick method of using, as it is at the disposal of the owner. Insurance as a means of forming an insurance fund assumes: - Merging of different producers, when they are not able to cover the losses for their own account. Then the redistribution of losses from one suffered to other insurers takes place. - Existence of the majority interested in forming the insurance fund, existence of insurance companies dealing with the redistribution of resources and possible losses. The fund is used only to cover the losses of certain participants of the fund, stipulated beforehand. The questions for the control: 1. Give the definition of insurance as an economic category. 2. Enumerate the characteristics of insurance. 3. Characterise the functions of insurance. 4. Classify insurance according to its forms. 5. Classify insurance according to its branches. 6. Enumerate and characterise types of insurance funds. The literature: 1.

Law of RM of 15 July 1993 «О страховании» The Official Monitor of

the RM №12, December 1993.

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2.

«Страховое дело», a book under edition of professor Reitman L.I., The

bank and exchange scientific – consultative center, M., 1992. 3.

Basacov I.I. «Страховое дело в вопросах и ответах», Rostov-on-the-

Don, «Феникс», 1999. 4.

Serbinovski B.U., Garikusha V.N. «Страховое дело», Rostov-on-the-

Don, «Феникс», 2000.

Theme 2. Juridical Aspects of Insurance Activity. 2.1. Forms of insurance activity. 2.2. State control over the insurance activity. 2.3.

Forms of control over insurance companies’ activities.

2.4. The core and main elements of the contract of insurance. 2.1. Forms of insurance activity. Nowadays there are the insurance companies of the following legal forms: 1)

Joint-stock insurance companies are companies that are formed to carry

out insurance operations, which nominal capital is formed by issuing or selling shares. They usually function on the same legal basis as other joint-stock companies and can carry out any kinds of insurance on license basis. 2)

State insurance organisations are juridically independent organisations,

the capital of which is partially or totally formed from the state funds. 3)

Mutual insurance communities form a system of contractual relations

between the insurers, usually between construction, transportation, industrial and financial corporations where they join their capital with one reason – to cover their possible losses. Every participant of such a community becomes both an underwriter and an insurer.

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4)

Private insurance companies belong to one owner or his family. English

corporation “Lloyd’s” is a unique form of such a corporation of private underwriters. All members of “Lloyd’s” join in syndicates to increase their capital when assuming the insurance risks. Insurance premiums and losses are proportionally distributed among the members of the syndicate according to their financial interests. 5)

Non-governmental retiring fund is a special form of personal insurance

which guarantees rental payments to insurer on achieving by them a particular age. 6)

Captive insurance company is a joint-stock insurance company

protecting generally insurance interests of the founders. 2.2. State control over the insurance activity. The activities of the underwriters radically differ from other enterprise’s activities as they are aimed towards uninterrupted process of compensation of losses caused by different circumstances. A big portion of responsibility of the underwriter for his activities requires a State insurance control. In general this control means the study of financial situation of the underwriter and his financial solvency. The aim of the state control is to provide and develop the market of insurance services, ensuring necessary conditions for the underwriter’s activities as well as defence of his interests. State control must help to establish insurance companies that have strong financial ground; avoid forming speculative and forged companies. These functions are performed by State Insurance Supervision at the Ministry of Finance. Obligations of the State Insurance Supervision: 1) introducing the unique State Insurance Registry; 2) auditing in insurance companies; 3) control over the insurance rates; 4) control over the payability of underwriters;

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5) setting the rules about forming and placing insurance reserve funds; 6) ensuring the publicity of insurance activities; 7) checking the authenticity of the presented reports; 8) providing official information about underwriter’s registration. The State Inspection has the right to: 1) have a call report about insurance activities and financial situation; 2) carry out the control over the authenticity of the information provided and over the observing the legislation; 3) instruct the underwriters about elimination the infringements and in case of non-fulfilment of state orders to hold up the effect of the license; 4) to make a claim against the underwriter in case of multiple infringements of law. 2.3. Forms of control over the insurance companies’ activities. The system of state regulation of insurance activity includes registration of insurance companies and issue of licenses for providing different kinds of insurance. To register an insurance company the founders make a written application to the Registration Chamber, enclosing the necessary documents (the protocol of the foundation meeting, the foundation contract and the charter). When the organisation is registered it is introduced into the State Register of Underwriters. The founder is given a State Registration Certificate. State registration may be denied only if the foundation documents do not meet the legislation requirements of RM. The following information is included in the State Register of Underwriters: 1) the full and abbreviated name of organisation; 2) the juridical form of organisation; 3) the period of functioning of the organisation; 4) the location of the organisation and its branches;

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5) the date of the organisation’s registration and its registration number; 6) the volume of the regulation fund; 7) the names of the persons entitled to represent the organisation. For the underwriters operating in Moldova to have a license is a must. To get this license an insurance company must pay the regulation fund in full. To get the license the underwriter must present the following documents: 1) an application form; 2) the charter; 3) a copy of the registration certificate; 4) the development program of insurance operations for the period of 3 years, including kinds of operations and their volume; maximum responsibility on individual risk, conditions of insurance protection; 5) terms of insurance; 6) certificates from banks and other institutions that confirm the existence of authorised and reserve funds; 7) economic grounds of activities including assessment of profits and losses, expenses and costs; 8) statistical grounds of tariff systems, rates and reserves. 2.4. The essence of an insurance contract and its main elements. To start an insurance activity it is necessary to develop individual contracts with each underwriter. Economic insurance contracts must assume juridical forms, that is the forms of contracts. Juridical regulation of insurance relations covers the rights and obligations of the parties. According to the insurance contract one of the parties – the underwriter – undertakes the risks of another party – insurer. Accordingly the underwriter undertakes to cover all expenses for any losses or damages happened under this contract. The insurer in his turn undertakes to pay the underwriter all agreed feel and keep all his obligations.

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When making the insurance contract the insurer gets acquainted with the rules of the proper kind of insurance and the terms of the contract are specified at that. There may be essential and nonessential terms of the contract. Essential terms express the subject of the contract and the main interests of the parties. The terms may be changed only if both parties agree to do it. Essential terms are: the insured objects; the volume of the insurance liabilities; insurance compensation; insurance sum; an insurance period; insurance rate. Non-essential terms are: the size of insurance premiums; the procedure of making a contract; the procedure of paying the insurance fee; the procedure of paying the insurance compensation, etc. When making the contract the parties must specify the causes of its termination. As a rule the insurance contract is terminated in the cases of: - expiration of validity; - carrying out of all taken obligations; - non-payment of insurance fees in due time; - liquidation of the underwriter; - liquidation of the insurer or his death; - arbitration award to invalidate the insurance contract. The questions for the control: 1. Enumerate and characterise types of insurance companies existing nowadays. 2. Specify purposes and targets of state regulation of insurance activities. 3. Enumerate the rights and obligations of the State Insurance Supervision Office. 4. Speak on the regulation of State registration of insurance companies. 5. Speak on the regulation of licensing of insurance activities. 12

6. Characterise the essential and non-essential conditions and terms of insurance contract. 7.

Specify the cases of termination of an insurance contract.

The literature: 1.

Law of RM of 15 July 1993 «О страховании» The Official Monitor of

the RM №12, December 1993. 2.

«Страховое дело», a book under edition of professor Reitman L.I., The

bank and exchange scientific – consultative center, M., 1992. 3.

Basacov I.I. «Страховое дело в вопросах и ответах», Rostov-on-the-

Don, «Феникс», 1999. 4.

Serbinovski B.U., Garikusha V.N. «Страховое дело», Rostov-on-the-

Don, «Феникс», 2000. 5.

«Страхование от А до Я» under edition of L.I. Korchevskaia, К.Е.

Turbina, М., «Инфра–М», 96. 6.

The decision of the Government of the RM №77 of 3 February 1996

«Об утверждении Положения о Государственном страховом надзоре».

Theme 3. Insurance Marketing. 3.1. The essence of the insurance marketing. 3.2.

Methods of promotion of insurance services.

3.3. Insurance middlemen. 3.4. The essence of the insurance market. 3.1. The essence of the insurance marketing. Marketing is a philosophy of the underwriter, determining the strategy and tactics of his activities in the conditions terms of competition. Marketing

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simultaneously combines market research, new product development, distribution, advertising, promotion, product improvement and so on. The Insurance service is the specific goods the sale of which is quite difficult. The central part of the underwriter’s marketing is sales activity, oriented to the sale or the insurance services promotion from the underwriter to the insurer. The sales activity is a range of the insurance company’s action that may be taken as two important tasks – to form the demand for the insurance services and to satisfy the insurance client’s interests of a company. The demand formation is a goal-oriented influence on potential clients with one purpose to raise the achieved demand level by the insurance company up to the wished level. It influences potential insurer with the help of advertising, forming a positive image of the underwriter, holding the meetings for concluding the insurance agreements, differentiation of tariffs for the insurance services, combination of the insurance services with different forms of trade and juridical service. The second important task of marketing is satisfaction of insurance interests. It is noted that the level of the insurance of the client’s service influences the demand, i.e. the higher the service level, the bigger demand for his insurance services. If the insurance services demand goes down, the leaders should find out the reasons and take measures directed to their elimination. Practically marketing is oriented to: 1) reasons of the necessity and goal-orientation of rendering some kinds of the insurance services; 2) demand formation on the insurance services; 3) satisfaction of the clients insurance interests; 4) price forming; 5) regulation of the insurance activity; 6) pure organisation of the insurance services promotion;

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7) coordinating and planning the production, sales and financial activity of a company; 8) organising new insurance services, corresponding to the insurers’ demands; 9) regulation and orientation of the company’s activity; 10)

current operative leadership of the insurance services’ realisation and

achievement of goals. However the specific marketing functions are: collecting and analysing the information about the market, making contacts with the insurers, managing the assortment of the insurance services. Strategic marketing solves the following tasks: the selection of the perspective company activities, orientation and kinds of the insurance services, making image and prestigious marking, definition of the price policy. Tactical marketing is oriented to form the system of relations of the services consumers, interaction with public, providing forms and methods of sales, sales management in accordance with the strategic goals. 3.2. Methods of promotion of insurance services. There are three main methods of insurance services promotion: extensive, exclusive and selective. Extensive method is using services of any go-between company, capable to conclude one or more insurance contracts. Exclusive method is used when the insurance company counteracts with only one general insurance agent, which has an exclusive right to conclude insurance contract in a given region. This contract should be concluded in favour of the above-mentioned insurance company. Selective method is used, when the insurance company counteracts with two or more general agents in a given region.

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Insurance service promotion is connected with the process of forming demand for the insurance services. Promotion includes any kind of informing people about insurance services or an insurance company. There are two basic and two auxiliary kinds of promotion. Basic kinds of promotion include advertising and personal contacts, auxiliary kinds of promotion include publicity and stimulation. Advertising is any paid form of impersonal providing the insurance service. Personal contact is an oral communication with one or more insured persons in order to conclude the insurance contract. Publicity is impersonal and unpaid stimulation of the demand for the insurance product by means of making people aware of it with the help of mass media. Stimulation are short-term measures of encouraging purchase or sale of an insured product and various non-repeated techniques, which are not included in traditional promotion. Actually insurance companies seldom use only one way of promotion, because any way has its own advantages, disadvantages and fields of application. Advertising has the following advantages: - attracts a large geographically spread insurance market; - informs potential insurers about services, it may be many times repeated for the same audience; - the potential insurers have a possibility to compare the offers of this company with those of the competitors’; - gives a certain idea about the underwriters and their services; - may change when necessary. Advertising has also some disadvantages: - the dialogue with the audience is impossible; - neither an individual approach to each insurer is possible; - it requires big charges. 16

A Personal contact has the following advantages: - it provides the dialogue with the insurers, raises a counter reaction of the customers; - the costs are lower than those for the advertising; -

it holds regular insurers, helps hesitating insurers to take decisions.

Disadvantages: - it is ineffective for informing the insurers as a personal contact is possible only with limited members; - the costs for one consumer are higher; - doesn’t cover a big, geographically spread market. Publicity has the following advantages: - it gives the audience more reliable information, covers a bigger number of citizens; - like advertising it has better possibilities for the presentation of the insurance company and its products; - it is relatively cheap. Disadvantages: - inability of the company to control; - non-guarantee of positive reaction of mass media; - mass media may accentuate the customers attention on feedback, essential characteristics of the underwriter and his services; - non-regularity of publications. Stimulation of the insurer has the following advantages: - it leads to a short-term increase of the contracts’ conclusion; - is supplementary to advertising and personal contacts; - attracts attention and holds the information that can attract the potential insurer’s interest; - has a certain incentive to conclude a contract.

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Disadvantages: - it may be used only as an additional means of promotion; - can not be regularly used. The essence of marketing is that operating by different means of promotion it chooses the one that has to be accented. 3.3. Insurance middlemen. In the process of carrying out their activity the insurance company has the right to use the middlemen’s services – insurance agents and brokers. The insurance broker is a juridical or a physical person registered in the right order as an entrepreneur, realising the intermediary’s activity on insurance on their behalf under the instructions of the insurer or underwriter. Brokerage on insurance that is effected by a physical person must be stipulated in the document about its validity. A physical person that has become an insurance broker, can not be the employee of any insurance company. Insurance agent is a physical, sometimes juridical person fulfilling, on behalf of the underwriter, the operations of concluding the contract with the population about the sole and property insurance and insurance payments for them. Insurance agent is a part-time worker of an insurance company. He gets his commissions for collecting insurance duties, for serving the insurer on the basis of the contract concluded. Insurance agent bears complete material responsibility to the underwriter. The most important difference between the insurance agent and the insurance broker is that the broker works as an independent qualified expert for the insurer. The insurance broker fulfils the following basic functions: - appreciates the subject of the insurance, i.e. he defines what kind of insurance the potential insurer needs and what exact risks are to be insured from;

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- makes comparative analysis of the financial health of a number of underwriters; - selects the most profitable underwriter for the client; - legalises insurance agreements agreed with the insurer; - controls duly received insurance fees from the insurer to the underwriter; - renders advice and assistance in receiving insurance sum of money by the insurer or the insurance compensation when the insurance accident happens. The insurance broker is not entitled to: - fulfil other kinds of activity; - take part in the authorised capital of the insurance companies, hold stocks, shares and other rights of participation. The insurance broker is responsible for: - the fulfilment of liabilities, stipulated in the agreement; - reliability, objectivity, completeness and due information given to the client and controlling authorities; - the secrecy of the information, that is the commercial secret of a client. The detailed list of the insurance broker’s liabilities and the responsibility to the insurer or the underwriter for their fulfilment are given in the agreement concluded between them. 3.4. The essence of the insurance market. Insurance market is a socio-economic area where the insurers that need insurance services operate, underwriters (insurance companies) satisfying the demand for them and insurance middlemen. The first section in the insurance market is an insurance company. That is the very place where the process of creation and usage of the insurance fund is exercised, some economic relations are formed and others appear; personal group and collective interests are interconnected.

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Insurance Company is an isolated structure, effecting the conclusion of the insurance agreements, and their fulfilment. Economically isolated insurance companies build their relations with other underwriters on the basis of reinsurance and co-insurance. Classification of the insurance market is carried out according to the branch reasons and scales. According to the branches reasons we differ the market of life insurance and markets of property insurance, responsibility insurance and accident insurance. According to scales we differ national, regional and international insurance markets. National Insurance Market is a field of the insurance organisation’s activity in a particular country. It consists of insurance companies, specialised reinsurance organisations, insurance middlemen. All the insurance activities on the national market are effected within the framework of the National Insurance Legislation, the control under the fulfilment of which is charged with the State Insurance Inspection. The bigger National Insurance market has been formed in the USA, Great Britain, Germany and other countries. Regional Insurance Market unites insurance companies, National Insurance markets of some separate regions, connected with tight integration relations between them. The biggest regional market is the North American Insurance Market (USA, Canada). International Insurance Market is a total combination of the National and Regional Insurance markets. In the narrow sense the local insurance markets, which are characterised by high specific share of International Insurance operations (New York, London), are called International market. Insurance market includes many kinds of potential clients of insurance services with different interests and demands. Market segment are clients of insurance services similarly reacted to these or those suggestions of insurance companies. Market segmenting is a process of dividing consumers into groups

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according to any sign actual for the realisation of an insurance service (age, sex, financial sufficiency, profession, etc.). Insurance Company must choose what kind of exact service it will offer and towards what kind of group it will be orientated. The segmentation is spread according to geographic and demographic signs, the level of income, etc. Geographic segmentation is built according to regional signs: republic, district, city, land, region. Demography is built on age, sex, level of the family income. The questions for the control: 1. Speak on the essence and basic tasks of insurance marketing. 2. Speak what targets the practical marketing is directed to. 3. Specify the basic functions and obligations of an insurance agent. 4. Enumerate the obligations of an insurance broker. 5. Characterise the essence of an insurance market. 6. Classify the insurance market. 7.

Characterise the principles of insurance market segmentation.

The literature: 1.

«Страховое дело», a book under edition of professor Reitman L.I., The

bank and exchange scientific – consultative center, M., 1992. 2.

Basacov I.I. «Страховое дело в вопросах и ответах», Rostov-on-the-

Don, «Феникс», 1999. 3.

Serbinovski B.U., Garikusha V.N. «Страховое дело», Rostov-on-the-

Don, «Феникс», 2000. 4.

«Страхование от А до Я» under edition of L.I. Korchevskaia, К.Е.

Turbina, М., «Инфра–М», 96. 5.

Gvozdenko

A.A.

"Основы

страхования",

М.,

«Финансы

и

статистика», 1998.

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