Entrepreneurship of a Commercial Insurance Company, its risks and regulation

Abstract

Purpose of the article: The main purpose of the article is to define the term “entrepreneurship of a comercial insurance company” and consider whether the legal definition of insurance activity can be identified with this term. For this purpose, this hypothesis is formulated: “Entrepreneurship of a commercial insurance company can be wholly and solely relate to the definition of insurance activity and activities related to insurance activity under the Insurance Act.” Methodology/methods: The methods of description, analysis, deduction and induction will be used in the article. The research part is based on a qualitative basis. It combines three methods of qualitative research, interviews with experts, a structured interview with open questions, a questionnaire with open questions. Its subject is a managed conversation with leading experts in the field of insurance and related branches. Evaluation of interviews was done by method of interview analysis, respectively thematic analysis and subsequent synthesis based on respondents’ answers. Synthesis was used as a method of gaining new knowledge. The conclusions are the basis for discussion for the theory completion in the case of the term mentioned above and for statements to other contexts that are defined in the objectives of the article. Synthetic approach is applied in the formulation of conclusions of the research. Significant findings for the theory are obtained by abstraction, as derived from observations of the issues, i.e. entrepreneurship of a commercial insurance company. The evaluation also includes a summary of significant matters and it reflects the opinion of the author devised throughout literature and based on interviews. Scientific aim: Article aims to define on the theoretical level the insurance activity of a commercial insurance company (by law) and on the basis of research to determine whether it is possible to identify it with this definition of entrepreneurship of a commercial insurance company. Definition of “entrepreneurship of a commercial insurance company” is the main scientific aim of the article. The article also aims to define risks of entrepreneurship of a commercial insurance company, to verify their importance and to assess the regulation level of the insurance industry. Findings: Among the findings the formulation of the term of entrepreneurship of a commercial insurance company can be included, as specified in the article text. In terms of risks of commercial insurance company’s entrepreneurship these risks were identified as the most significant ones: financial risks, as well as regulatory risk and credit risk of reinsurers. From the field of internal risks the operational risk was mentioned, especially its two forms – human error and failure in the IT field. Conclusions: Although the Insurance Act precisely defines the insurance activity, it is not clear whether it is possible to equate this activity with the entrepreneurship of a commercial insurance company. This ambiguity was attempted to clarify the above formulated hypothesis. The result was negative, which supports the argument considering the definition of insurance activity “only” a pragmatic tool for gripping and setting operation of a commercial insurance company, which does not aim to provide a global view on its entrepreneurship.