A Statistical Analysis of the Relationship between the Scope and Efficiency of Mutual Insurance Companies in Poland

Abstract

This article aims to answer the question of whether there is a relationship between the scope of insurance business declared by a mutual insurance company (MIC) - based on supervisory approval - and the effectiveness of that MIC, as measured by standard financial indicators. As a result of posing the thesis in these terms, the MICs studied were arbitrarily split into those with a small range of activity (up to 9 classes), and those with a large range of activities (more than 9 classes). The effectiveness of the two groups was then analysed. The statistical study covers the years 1996-2010. The first section outlines the general position and efficiency of MICs on the Polish insurance market in the years 2000-2010, as measured by value of gross premiums written and net income. The second part presents the results of an empirical study on the relationships between a range of activities of MICs acting in Section II and their effectiveness as measured by the following indicators: the value of gross premiums written, the value of premiums, acquisition costs, administration costs, net results, and the profitability of sales (ROS). The paper ends with conclusions.