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Orientation: The South African Insurance Act 18 of 2017 became effective on 01 July 2018 as part of the new Twin Peaks regulatory system. The often stated reason for the new regulatory regime is the 2008 global financial crisis. Regulatory changes in the local environment took place during two distinct periods in history following the Sharpeville and Soweto uprisings in 1960 and 1976. International sanctions combined with an outflow of capital ultimately saw government amending the regulatory framework through new ownership requirements for all insurers in order to secure funds locally. Research purpose: The purpose of this research was to explain how the contextual dynamics impacted regulatory responses, and what was the subsequent effect on the short-term insurance industry. Motivation for the study: The motivation for the study was to explain and understand market dynamics following the regulatory tightening of the insurance industry within a historical framework. Research approach/design and method: This article provides an empirical analysis of how regulatory intervention transformed market characteristics and thus contributed to an understanding of the localisation of a financial industry, namely the short-term insurance industry. This was achieved through a description of the regulation, including the exploration of possible consequences at the time of two major events in history. Main findings: In both cases the findings were that the market size contracted, corrected and expanded within a few years. Practical/managerial implications: This article provides a practical analysis of local industry performance in an environment of legislative changes which may assist managers in a regulated industry. Contribution/value-add: The contribution is an industry analysis over an extended time frame which may add value in the adoption of similar domestication policies in the rest of Africa.

The article examines the investment potential of insurance companies as a factor in stabilizing the country’s financial system. The main focus is on analyzing the regulatory requirements in the European Union and the possibilities for their implementation in the insurance market of Ukraine. Insurance companies, especially those engaged in life insurance, are traditionally regarded as powerful institutional investors with substantial financial resources and the ability to undertake long-term investments in the real sector of the economy. It is has been determined that EU insurers invest in the real sector by purchasing corporate bonds, with their share in the structure of their investment portfolios accounting for approximately 25 percent (excluding investments in collective investment companies). In the investment portfolios of European insurance companies, government securities constitute the largest share, while the share of stocks is noticeably low. In Ukraine, both investments in stocks and investments in corporate bonds occupy negligible portions of insurers’ investments. It is underscored that regulatory requirements may act as one of the factors shaping an insurer’s investment strategy. In European Union countries, regulatory requirements for calculating solvency capital are defined in Directive 2009/138/EC (Solvency II) and Regulation (EU) No. 2015/35. The market risk module, as part of solvency capital, includes such risk sub-modules as interest rate risk, equity risk, spread risk, property risk, currency risk, and market concentration risk. The article notes that the European Commission has introduced a number of innovations related to the modification of certain solvency capital requirements in order to encourage insurers to invest into the real sector of the economy. In particular, they concerned the reduction of solvency capital requirement levels for investments such as investments in infrastructure projects; investments in unlisted equity; long-term equity investments. The article provides an assessment of the efficiency of such innovations. It is concluded that the experience of implementing such innovations may be relevant for implementation in Ukraine, considering that by 2027, some Ukrainian insurance companies will calculate their solvency capital according to rules harmonized with Solvency II.

The article substantiates the key importance of ensuring economic security in the insurance market in the context of addressing tasks for strengthening stability and ensuring its sustainable operation and activating development. By using a comprehensive approach to the mechanisms of ensuring economic security in the insurance market, the institutional, financial-economic, organizational-management, informational-analytical, and social-communication aspects are included. The substantive content, tools of influence, and relevant objects of regulation are revealed, allowing for a holistic understanding of the mechanisms for ensuring economic security in the insurance market. Emphasis is placed on providing regulatory and legal support for insurance operations, financial sustainability and transparency of the activities of insurance market participants, improving the quality of internal management of insurance companies, developing digital technologies, actuarial and analytical support, as well as strengthening trust in insurance from the public and businesses. It is noted that in terms of the institutional aspect, the mechanisms include insurance companies, insurance market intermediaries, regulatory bodies, and professional associations; in the financial-economic aspect – the assets of insurers, insurance reserves, insurance premiums, and payouts; in the organizational and managerial aspect – the governing bodies of insurance companies, internal control services, underwriting operations, audits, and the human resource potential of the industry; in the informational-analytical aspect – financial and statistical reporting, information flows, databases, analytics, and actuarial calculation systems; in the social-communication aspect – interaction with policyholders, the public, target consumer groups, and the media. It is determned that the effectiveness of mechanisms ensuring the economic security of the insurance market is confirmed by their ability to increase the resilience and transparency of market relations, strengthen the trust of market participants, and promote the stable development of the insurance industry.

The article applies a scientific-methodical approach to the taxation of insurers' incomes in order to achieve an optimal balance between the revenue base of the budget and the minimization of budget risks. Empirical measurement of relationships between the financial results of insurers and tax regulation of their activities using economic models and mathematical apparatus made it possible to develop the latest financial decision-making tools based on the Census II method. These tools contribute to the formation of the tax base (income after insurance activities) from the point of view of minimizing the impact of budgetary risks on the level of state budget revenues. The foundation of the developed scientific-methodological approach is the algorithm of actions for determining the actual deviation of the tax base from the calculated trend cycle. This allows us to minimize the risk of not receiving budget revenues and create multiple scenarios of resilience to the influence of external factors.The proposed approach makes it possible to produce alternative financial decisions regarding the choice of the taxation mechanism of domestic insurers in order to minimize budgetary risks. The practical significance of the obtained results is revealed in the developing theoretical and methodological provisions and outlined methodological approaches in practical activities, which justify the optimal choice of the tax base of insurance companies with the lowest level of variability, taking into account the influence of exogenous processes in a dynamic market background. This will form prerogatives to minimize the risk of not receiving budget revenues. It has been empirically proven that the specified scientific-methodical approach will contribute to the optimization of the insurance business taxation process, ensuring a balance between the interests of the state and all participants in this market.

The impact of insurer competition on welfare, negotiated provider prices, and premiums in the U.S. private health care industry is theoretically ambiguous. Reduced competition may increase the premiums charged by insurers and their payments made to hospitals. However, it may also strengthen insurers' bargaining leverage when negotiating with hospitals, thereby generating offsetting cost decreases. To understand and measure this trade-off, we estimate a model of employer-insurer and hospitalinsurer bargaining over premiums and reimbursements, household demand for insurance, and individual demand for hospitals using detailed California admissions, claims, and enrollment data. We simulate the removal of both large and small insurers from consumers' choice sets. Although consumer welfare decreases and premiums typically increase, we find that premiums can fall upon the removal of a small insurer if an employer imposes effective premium constraints through negotiations with the remaining insurers. We also document substantial heterogeneity in hospital price adjustments upon the removal of an insurer, with renegotiated price increases and decreases of as much as 10% across markets.

Background Policymakers have embraced substitution of hospital care to more affordable primary care as a means to contain rising healthcare costs and provide care closer to home. Health insurers play an important role in the extent to which substitution of care takes place. This study explores the perspective of Dutch health insurers on barriers and facilitators to facilitate a shift from hospitals to general practice in the current healthcare system. Methods Semi-structured group interviews were conducted with healthcare purchasers from various health insurers, involving fifteen participants from seven insurers representing 76.5% of the market. Thematic analysis was used to identify perceived facilitators and barriers for effective substitution of care. Results Long-term contracts that enable strategic planning and collaboration between general practices and hospitals, as well as strong organizational structures in general practice and long waiting times in hospitals are reported to facilitate substitution. Uncertainties around collaboration under the Competition Act, inadequate compensation through the risk equalization model, complex billing codes for innovative initiatives, a rigid national budgetary framework and strong bargaining power of hospitals as opposed to insurers and general practices are stated to hinder the shift towards general practice. Conclusions Key areas for improvement to facilitate substitution, as reported by healthcare purchasers, include clear guidelines on insurer collaboration, adjustments to the risk equalization model, strengthening the bargaining power of general practices, and promoting long-term contracts. This study provides insights into the perceived barriers and facilitators for care substitution from the payer’s perspective. Addressing these barriers is essential for facilitating the shift from hospital to general practice care. Also, potential discrepancies between perceptions and current regulations highlight areas where enhanced dialogue and collaboration between policy makers and health insurers could improve mutual understanding and regulatory compliance.

Every insurance companies have a capacity limit related to the maximum claim that can be borne. Therefore, insurance companies need to reinsure risks to reinsurance companies. Besides of quota-share, types of reinsurance contracts that commonly used is stop-loss. The quota-share reinsurance premium is proportional based on the amount claim that is covered, but not safe against a large claim. While for stop-loss, the reinsurance premium is relatively large but safe for a large claim. So, this paper combines both types of reinsurance to cover the shortcomings with their respective strengths. After being combined, it is necessary to determine the optimal quota-share proportion and stop-loss retention. One criterion of determines optimal proportion and retention is based on Value-at-Risk (VaR) optimization. With the reinsurance premium as a constraint, this optimization problem is solved for each type of reinsurance combination, be it quota-share before stop-loss or stop-loss before quota-share. From each of these types combinations, the result is optimal quota-share proportion and stop-loss retention, so as produce a minimum VaR value from the borne risk by insurance companies. by comparing the results of VaR optimization of these combinations, stop-loss before quota-share is obtained resulting in a more minimum VaR value.

Policy Points Looking for a way to curtail market power abuses in health care and rein in prices, 20 states have restricted most‐favored‐nation (MFN) clauses in some health care contracts. Little is known as to whether restrictions on MFN clauses slow health care price growth. Banning MFN clauses between insurers and hospitals in highly concentrated insurer markets seems to improve competition and lead to lower hospital prices. Context Most‐favored‐nation (MFN) contract clauses have recently garnered attention from both Congress and state legislatures looking for ways to curtail market power abuses in health care and rein in prices. In health care, a typical MFN contract clause is stipulated by the insurer and requires a health care provider to grant the insurer the lowest (i.e., the most‐favored) price among the insurers it contracts with. As of August 2020, 20 states restrict the use of MFN clauses in health care contracts (19 states ban their use in at least some health care contracts), with 8 states prohibiting their use between 2010 and 2016. Methods Using event study and difference‐in‐differences research designs, we compared prices for a standardized hospital admission in states that banned MFN clauses between 2010 and 2016 with standardized hospital admission prices in states without MFN bans. Findings Our results show that bans on MFN clauses reduced hospital price growth in metropolitan statistical areas (MSAs) with highly concentrated insurer markets. Specifically, we found that mean hospital prices in MSAs with highly concentrated insurer markets would have been$472 (2.8%) lower in 2016 had the MSAs been in states that banned MFN clauses in 2010. In 2016, the population in our sample that resided in MSAs with highly concentrated insurer markets was just under 75 million (23% of the US population). Hence, banning MFN clauses in all MSAs in our sample with highly concentrated insurer markets in 2010 would have generated savings on hospital expenditures in the range of $ 2.4 billion per year. Conclusions Our empirical findings suggest banning MFN clauses between insurers and providers in highly concentrated insurer markets would improve competition and lead to lower prices and expenditures.

The article identifies three main stages of supervision of and control over insurance activities as the main direction in regulation of insurance companies: preliminary, current and final one. It is noted that the dominant area of external financial control is supervision of the solvency of insurance companies, assigned to the National Commission for the State Regulation of Financial Services Markets. The world practice distinguishes three types of supervision of insurers’ activities: licensing supervision, prudential supervision and business supervision. Prudential aspects of insurance regulation involve supervising the financial condition and professionalism of insurers. Business supervision is aimed at regulating relationships between the insurer and the insured, advertising the existing and new insurance products. The necessity of monitoring such important aspects as formation of insurance tariffs and development of typical forms of policies (the implementation of financial control) is emphasized. The article emphasizes the importance of using indirect methods for stimulating the development of insurance business by the state: ensuring the stability of legislation; forming insurance interest; improving the effectiveness of the state supervision system; providing availability of a guarantee system; ensuring presence of insurance competition; increasing the effectiveness of the insurance market infrastructure; intensifying investment activity; attracting foreign insurers to the market; promoting solvent demand for insurance services.