MPF_EARP Insurance economics and management

Faculty of Economics and Administration
Spring 2024
Extent and Intensity
2/2/0. 6 credit(s). Type of Completion: zk (examination).
Teacher(s)
doc. Ing. Eva Vávrová, Ph.D. (lecturer)
doc. Ing. Eva Vávrová, Ph.D. (seminar tutor)
Mgr. Silvie Zlatošová, Ph.D. (seminar tutor)
Guaranteed by
doc. Ing. Eva Vávrová, Ph.D.
Department of Finance – Faculty of Economics and Administration
Contact Person: Iva Havlíčková
Supplier department: Department of Finance – Faculty of Economics and Administration
Timetable
Wed 8:00–9:50 P303, except Wed 3. 4.
  • Timetable of Seminar Groups:
MPF_EARP/01: Wed 10:00–11:50 VT204, except Wed 3. 4., E. Vávrová, S. Zlatošová
MPF_EARP/02: Wed 14:00–15:50 VT314, except Wed 3. 4., E. Vávrová, S. Zlatošová
Prerequisites
Course prerequisites: BPF_POJ1 Insurance, BPF_FIMA Financial Mathematics, BPE_ZAEK Econometrics.
Course Enrolment Limitations
The course is only offered to the students of the study fields the course is directly associated with.

The capacity limit for the course is 55 student(s).
Current registration and enrolment status: enrolled: 58/55, only registered: 0/55
fields of study / plans the course is directly associated with
Course objectives
The main objective of the course is to introduce students to principles of insurance economics and insurance company management. During the course students will be become familiar with fundamentals of insurance business, including marketing, reinsurance, technical provisions making and investment.
Learning outcomes
After successful completion of the course, students should be able to:
− evaluate factors influencing insurance demand and supply,
− define global insurance strategy and technologies,
− identify communication channels betweens insurance company and its clients,
− explain the methods and process of insurance costumer relationship management,
− comprehend the financial situation of a particular insurance company based on financial statement analysis,
− perform an analysis of insurance company solvency, reinsurance, and competitive environment,
− understand capital adequacy requirements and investment regulations for insurance companies.
Syllabus
  • Lectures outline
  • 1. Microeconomics of Insurance I - Insurance demand. The theory of insurance demand - basic model. The expected utility maximisation hypothesis. Alternatives to expected utility theory. Corporate demand for insurance (reasons for corporate demand for insurance, advantages of insurance, empirical studies of corporate demand for insurance).
  • 2. Insurance company as a business entity. The theory of insurance company growth (objective of the insurance company). Insurance company business organisation. Insurance technology. Economic and legal background of insurance company operations in the Czech Republic.
  • 3. Insurance marketing I - distribution channels of insurance products. The overview of distribution channels for insurance products. Insurance agents and brokers in the Czech Republic. New product development.
  • 4. Insurance marketing II - customer relationship management. CRM information system. Measurement of customer satisfaction. Data mining technics in insurance.
  • 5. Insurance company liability management. Technical provisions. Financial management for life and non-life insurance company. Guidelines on the valuation of technical provisions.
  • 6. Insurance company asset management. Investment activities of insurance companies. Bond valuation techniques. Investment portfolio optimisation with constraints.
  • 7. Insurance company financial analysis. Information sources for financial analysis of insurance companies. Income statement analysis. Measures of return. Factors influencing insurance company returns. Underwriting cycle.
  • 8. Asset Liability Management in insurance. Overview of ALM methods in insurance. Duration and cash flow matching. Dynamic financial analysis. ALM as a part of the insurance company strategic management.
  • 9. Microeconomics of Insurance II – insurance supply. Traditional premium calculation. Financial models of insurance pricing (insurance CAPM, option pricing). Empirical evidence on the actual behaviour of insurance companies. Economies of scope and economies of scale in the supply of insurance. Applications of data envelopment analysis for the analysis of insurance market efficiency.
  • 10. Insurance company solvency and insurance regulation under Solvency II. Financial stability of the insurance company. Solvency of the insurance company. Solvency tests. Main Solvency II regulations.
  • 11. Market discipline in insurance. Corporate governance and compliance in insurance. Market failures and asymmetric information in insurance market. Insurance company rating (classification, methodology). Insurance company auditing (types, advantages and risks).
  • 12. Insurance company valuation. Relative valuation techniques. Embedded value calculations.

  • Seminars outline
  • 1. Introductory seminar (organisation; assessment methods and criteria).
  • 2. Insurance demand - discussion. Choice of insurance based on utility maximisation hypothesis.
  • 3. Insurance company as a business entity - discussion. Selection of insurance companies for financial analysis. The analysis of the organisation structure.
  • 4. Distribution of insurance products - discussion.
  • 5. New product development and customer relationship management in insurance - discussion. The analysis of the marketing strategy.
  • 6. Reporting in insurance. Financial statements of insurance company. Insurance company liability management - discussion. Insurance claim management. Calculations of unearned premium reserves. The analysis of liabilities.
  • 7. Insurance company asset management - discussion. The analysis of insurance company investments. An example of investment portfolio construction and evaluation.
  • 8. Insurance company financial analysis - discussion. The analysis of revenues and expenses. The analysis of liquidity and indebtedness. Spider graph analysis.
  • 9. Asset Liability Management in insurance - discussion. Cash flow modeling in life/non-life insurance companies.
  • 10. Insurance supply - discussion.
  • 11. Insurance company solvency and insurance regulation under Solvency II - discussion. Simplified example of capital adequacy calculation under Solvency II.
  • 12. Market discipline in insurance - discussion. Course overview before the exam.
Literature
    required literature
  • VÁVROVÁ, Eva. Finanční řízení komerčních pojišťoven. 1. vyd. Praha: Grada, 2014, 190 s. ISBN 9788024746623. URL info
  • ZWEIFEL, Peter and Roland EISEN. Insurance economics. Heidelberg: Springer, 2012, xvi, 451. ISBN 9783642205477. info
  • ŘEZÁČ, František, Gabriela OŠKRDALOVÁ, Martin ŘEZÁČ, Miroslava ŠIKULOVÁ and Petr VALOUCH. Marketingové řízení komerční pojišťovny (Marketing management of insurace company). 1. vyd. Brno: Masarykova univerzita, Tisk: BonnyPress, 2009, 210 pp. ISBN 978-80-210-4799-0. info
    recommended literature
  • Financial Services Marketing : An International Guide to Principles and Practice (2017). Christine Ennew, Nigel Waite, and Róisín Waite https://ebookcentral.proquest.com/lib/masaryk-ebooks/detail.action?docID=5110093
  • KARFÍKOVÁ, Marie, Vladimír PŘIKRYL and Roman VYBÍRAL. Pojišťovací právo. 2. přepracované vydání. Praha: Leges, 2018, 432 stran. ISBN 9788075022714. info
  • MESRŠMÍD, Jaroslav. Marketing v pojišťovnictví. 1st ed. Praha: Professional Publishing, 2016, 264 pp. ISBN 978-80-7431-158-1. info
  • CIPRA, Tomáš. Riziko ve financích a pojišťovnictví : Basel III a Solvency II. Vydání 1. Praha: Ekopress, 2015, viii, 515. ISBN 9788087865248. info
Teaching methods
The course is taught in lectures and seminars, which include class discussions and require active participation. Report improves the ability of students to summarize a certain issue in the field of insurance economics and discuss it critically. Readings serve to broaden and deepen the spectrum of knowledge students acquire during the lectures.
Assessment methods
Lectures and seminars proceed contentually in accordance with the mentioned topics range. Seminars are divided into twelve blocks. If the student enrolls in the course while going on an internship abroad (Erasmus), he must fulfill all requirements and the exam upon his return.
For the successful completion of the course students are required:
a) active participation in seminars (the ability to answer seminar questions and solve problems);
b) submit an individual report on the strategy, management and financial stability of the chosen insurance company (guidelines for writing the report are provided in the IS) - submit by the end of Week 12;
c) two-part written exam, i.e., written test in seminars and final exam.
Following is the scale that will be used to evaluate your performance in this class: report write-up (up to 5 grade points), passing a written test in seminars (up to 5 grade points), final exam (up to 20 grade points).
Rating scale:
A: 92 – 100 % (28 and more points),
B: 84 – 91 % (26 – 27 points),
C: 76 – 83 % (24 – 25 points),
D: 68 – 75 % (21 – 23 points),
E: 60 – 67 % (18 – 20 points),
F: less than 60 % (less than 18 points)
Warning: Any copying, recording or leaking tests, use of unauthorized tools, aids and communication devices, or other disruptions of objectivity of exams will be considered non-compliance with the conditions for course completion as well as a severe violation of the study rules. Consequently, the teacher will finish the exam by awarding grade "F" in the Information System, and the Dean will initiate disciplinary proceedings that may result in study termination.
Language of instruction
Czech
Further comments (probably available only in Czech)
The course is taught annually.
Credit evaluation note: k = 1.
The course is also listed under the following terms Spring 2010, Spring 2011, Spring 2012, Spring 2013, Spring 2014, Spring 2015, Spring 2016, Spring 2017, Spring 2018, Spring 2019, Spring 2020, Spring 2021, Spring 2022, Spring 2023, Spring 2025.
  • Enrolment Statistics (Spring 2024, recent)
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