MOTOR VEHICLE INSURANCE AS A SYSTEMICALLY SIGNIFICANT RISK TO THE FINANCIAL AND ECONOMIC SECURITY OF AN INSURANCE COMPANY: PORTFOLIO MANAGEMENT WITHIN THE FRAMEWORK OF FINANCIAL MANAGEMENT

Abstract

The article examines motor vehicle insurance as a systemically significant risk to the financial and economic security of an insurance company and as a major source of financial and economic risks from the perspective of portfolio management within financial management in the contemporary Ukrainian insurance market. Emphasis is placed on the dominant share of motor insurance, exceeding half of the total gross premiums, within the structure of insurance inflows, which increases the sensitivity of insurers’ financial results to fluctuations in loss ratios, changes in market conditions, and regulatory environment. It is substantiated that the concentration of premiums and insurance liabilities within the motor insurance portfolio, in the absence of adequate financial management mechanisms, creates a systemically significant risk to the financial and economic security of the insurer and intensifies its dependence on the performance of these products. Analysis of insurance claims reveals a moderate and volatile claims burden in motor insurance, which directly affects cash flows, the formation of insurance reserves, and the solvency of the company. Motor insurance is shown to simultaneously serve as the primary source of revenue and as a channel for transmitting financial shocks within insurance operations, creating threats to financial stability in cases of ineffective portfolio management. The necessity of integrated management of the motor insurance portfolio within financial management is justified, utilizing portfolio optimization, risk-oriented underwriting, loss control, reinsurance, and effective management of insurance reserves. The application of these instruments is emphasized as enabling a reduction in risk concentration, limiting claims volatility, and ensuring alignment between the volume of assumed risks, tariff policy, and the insurer’s financial capacity. The features of the manifestation of motor vehicle insurance as a systemically significant risk to the financial and economic security of the insurance company are determined. In this context, an authorial definition of the concept “Systemically Significant Risk of Motor Vehicle Insurance” is proposed, which takes into account premium concentration, persistent claims volatility, and the potential impact on the financial and economic security of the insurance company as well as on portfolio management within financial management.