Marketing and management in insurance: impact of innovations measures

. Nowadays insurance industry has huge innovation potential. Several key vectors for developing the concept of insurance tech include machine learning, business analytics, consumer protection rules, Big Data, artificial intelligence, neural networks, blockchain


Introduction.
Today, innovation is one of the key drivers of changes in the financial sector.In recent years, new technological developments in finance have come into active use as «FinTech».According to «FinTech,» the concept «InsurTech» is actively used.Various technological innovations, in this case, help reduce transaction costs and significantly improve the process of providing services to consumers.The insurance market is a special society economic structure, certain sphere of monetary relations, where the object of the sale act as insurance protection.The insurance market is a complex integrated system, which includes different structural links.Marketing in insurance could is considering from different points of view.The philosophy of the insurance business focused on the total satisfaction of the needs of policyholders.It is also a method of managing the commercial activities of insurance companies and practical promotion activities of insurance products on the market.
In addition, the widespread use of active Internet connections, various mobile devices, and the development of mobile applications has led to the possibility of reducing barriers to entry into the financial market and increasing competition between financial institutions.Therefore, for some financial market participants, innovative technologies open up new opportunities for development and others.Unfortunately, they could become a destructive force that leads to the destruction of the business.Introducing innovative technologies in the insurer's activities is necessary for its competitive operation in the market.Therefore, its implementation requires an analysis of foreign experience in using many innovative technologies, its adaptation to the specifics of the domestic market, identifying obstacles to their implementation (Vasylieva et al., 2018;2019).The insurance industry has always been a virtual segment in the direction of technological change.While the banking sector has been actively transformed through digital technologies, insurance has continued to operate in the same way as it did decades before.However, today insurance experts are actively analyzing the nature of modern risks and implementing new digital insurance market formation concepts.
The peculiarity of the marketing strategies of insurance companies is that they are not dynamic.This situation is due to the long life of the insurance product, its specific features.Currently, insurance marketing is forming as a target concept, consumer-oriented.It is based on marketing research of the insurance market in the conditions of development of innovations the traditional insurance portfolio changes.In addition, marketing is integrating into all stages of the insurance company -from creating a new insurance product to its active implementation.
Literature review.The successful implementation of any innovative project depends on scientific and marketing Research.It is tailored to the consumer's needs.The role of innovative technologies in improving the decision-making process in marketing research in insurance is essential.It is relevant for each country in the modern world of globalization (Plastun et al., 2019;2020;Vorontsova et al., 2020).Every year, there are new theoretical and applied studies on the innovative activities of insurance companies (Stavrova, 2020;Goncharenko, 2020;Kaya, 2021;Umadia and Kasztelnik, 2020;Brown and Kasztelnik, 2020).The key priority of modern financial institutions, including insurance companies, is the reorientation of their activities from product-oriented to customer-oriented.The insured's interests should be in the first place under forming the marketing strategy and planning of the company (Bilan et al., 2019;Kobushko et al., 2020).These facts are stated in the works of Agnihotri and Gupta (2019), Horvath and Balazs (2020), Samoilikova (2020), Aljaloudi and Warrad (2020).
Considering the insurance product in the dimension of the customer-oriented model, the level of satisfaction of the insured with the services provided by the insurance company occurs in terms of its needs, a combination of innovative and traditional insurance products, and sales channels (Vargas-Hernandez and Rodríguez, 2018).Real-time automation of data flow management helps marketing and management professionals to formulate effective customer interaction strategies.One such technology is the Internet of Things (IoT) (Moradi, 2021).The development of cloud technologies and IoT in symbiosis makes it possible to freely monitor the transformation of business flows between the insurance company Marketing and Management of Innovations, 2021, Issue 2 233 http://mmi.fem.sumdu.edu.ua/en and the insured (Giebe et al., 2019).Understanding how the insurance sector responds to economic and societal technological innovations underlies the formation of an effective policy to promote new insurance products (Zolkover and Renkas, 2020;Kasztelnik and Brown, 2020).Many startups in medicine, automobile business, financial activities create new challenges for insurers to form a proposal for new products and services.A clear example of such a situation is the introduction into using the car startup Uber.Compulsory taxi insurance is a problem for modern carriers, as drawing up an insurance contract and making insurance payments is entirely the car owner's responsibility.This situation often provokes opposition from them, as this activity is not the central place of the driver's work.So he is not interested in incurring any additional costs.Another striking example of the fact that the dynamic development of digital technologies is not always exclusively positive for the financial sector is the introduction of a new insurance product of cyber insurance (Didenko and Sidelnyk, 2021).Cyber insurance provides insurance for the risks associated with the loss or damage of information due to various hacker attacks, virus damage, phishing, etc.Unfortunately, the imperfection of the domestic legal framework, the lack of transparent algorithms of action both on the part of the state and insurance companies to promote this insurance product make it almost impossible to use it in Ukraine.
According to marketing and management, the relationship between innovation and insurance market development is not yet deeply researched.As a result, it leads to the achieving the following purpose of this Research -to confirm or refute the hypothesis about the significant functional link between the innovative development in the country and key insurance determinants as a driver for transformation in marketing strategies of insurance companies.
Methodology and research methods.Consider the main stages of the life cycle of an innovative insurance product (Figure 1).There are three main stages: initial, stage of product implementation, and final.Each of the presented stages is characterizing by a precise sequence of steps.Their order of execution could change depending on many factors: internal and external.Thus, the low level of confidence of the insured in the insurance company and the insurance mechanism, in general, has a negative impact on the formation of an innovative product at an early stage.In addition, the low level of development of the network of sales of insurance products and the imperfection of insurance contracts creates difficulties during the implementation phase.As part of the financial market, the insurance market largely depends on various structural economic shifts (inflation rate, bank deposit rates, income level, etc.).
According to structural and commodity marketing, for the successful introduction of a new innovative insurance product, it is necessary: change the core of the insurance product (identify new fragments of the insurance product and explore possible risks for target groups); change the shell of the insurance product (build a new architecture and design of the insurance product); to formulate new target offers (Research of profiles of insurers in social networks for estimation of features and preferences of clients).
The use of such innovative technologies in insurance as telematics, blockchain, Big Data, IoT, and others involves the use of new sales channels of insurance products (online sales, smartphones, tablets, aggregators) and other media of interaction with the client (P2P, M2M, web-interface).
The main principles of marketing in insurance in the context of the introduction of innovative technologies include: adaptation of the offer of innovative insurance products to the needs of the insurance market; a comprehensive study of the insurance market and consumer demand; identification of the functional impact of innovative goods and services on the insurance company.Transferring insurance marketing and management to the Internet would significantly save interaction between the insurance company and the client.It would eliminate the problem of localization of insurance companies, greatly facilitate obtaining and processing information, reduce the cost of maintaining insurance contracts.All this would reduce the price of the insurance product.The Research of the critical factors impact of innovative development in countries with different economic development on the insurance market determinants is conducting using the special software STATA 12 (Longitudinal/panel data module).This module allows processing panel data.Operators xtreg and areg are using for it.One of the advantages of panel data is that they help avoid «shifting the aggregation» of the data.The survey is conducted immediately in terms of a certain period, among a particular set of countries and indicators.In addition, when working with panel data, freedom degrees increase.It helps to reduce the collinearity between variables.This fact is essential in assessing the model.
The regression model is building for the panel data array.It is generally presenting as follows (1).
=   +   indicators for the study -a statistical method of systematizing indicators into components relative to factor loads.This method involves defining groups of variables (components).They are interconnecting by hidden connections and could explain the object under study from a particular functional position.The completeness of the factorization must be not less than 70%.It means that the optimal number of components from which to select the most significant indicators, the total variance should exceed 70%, and the Kaiser criterion should exceed 1.
There are follow hypothesis of Research: to confirm the hypothesis about the presence of the functional link between the level of innovative development of the country and key insurance determinants as a driver for transformation in marketing strategies of insurance companies; to confirm the hypothesis about the formation of marketing strategies in modern insurance companies as both innovative and traditional ways.
To confirm the first hypothesis, a set of panel data was formed from several indicators.These indicators describe the critical determinants of innovative development of the studied countries and indicators that reflect key trends in the insurance market.Seventeen countries from Eastern and Central Europe are considering: Armenia, Azerbaijan, Belarus, Bulgaria, the Czech Republic, Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Slovakia, Tajikistan, and Ukraine.The study period covered 2004-2019.All input data are obtaining from the database of the International Monetary Fund and TheGlobalEconomy.Let's consider in more detail those indicators which are taking into consideration.Six indicators (Inv1-Inv6) are selecting as indicators of innovative development.These six indicators and one additional indicator (GDP, C1 -control variable) play independent variables.Ten indicators consider dependent variables.Notably, they are critical determinants of insurance sector development (Ins1 -Ins10).Table 1 presents in more detail all these indicators.As part of the data has absolute units (million dollars) and the other part is relative (%), the normalization should be done.In this case, taking the logarithm is the best option for normalization.This normalization method of the input data is acceptable because, given the goal, there is no need to identify stimulants and disincentives.At the first stage of the study, the dependent variables should be filtered.The Principal Components Analysis is using for it.Based on the values of the cumulative variance (Table 2) and the Kaiser test (Figure 2), the optimal number of components 3 was determined.3,48167 2,83525 1,74258 0,781577 0,640149 0,330806 0,176164 0,0117081 0,0000738914 0,000014786 0,646415 1,09267 0,961008 0,141427 0,309343 0,154643 0,164455 0,0116342 0,0000591055 0,000 0,3482 0,2835 0,1743 0,0782 0,0640 0,0331 0,0176 0,0012 0,0000 0,0000 0,3482 0,6317 0,8060 0,8841 0,9481 0,9812 0,9988 1,0000 1,0000 1,0000 Sources: developed by the authors.3) shows only those variables whose factor loads are more significant than 0.3.The five variables have a factor load of more than 0.5.So they would participate in the next phase of the study.Five multivariate regression models are constructing for the following dependent variables: Ins3 (Outstanding Deposits, Insurance corporations, of which: Non-life insurance), Ins4 (Outstanding Deposits, Insurance corporations), Ins6 (Number of Policies, Insurance Corporations, of which: life insurance), Іns7 (Insurance corporations, of which: Life insurance and annuities entitlements) and Іns10 (Number of life insurance policies per 1,000 adults).

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According to the values of the Broysch-Pagan and Hausman tests, it would be building multifactor regression models with random effects for all dependent variables.
Consider the simulation results (Tables 4-8).In this case, the value of the criterion of determination for all models is more than 0,77.It indicates a high degree of dependence of these indicators of the insurance market on the determinants of innovation development.The Wald criterion (χ2) helps to assess the statistical significance of the statistical model.If χ2dist.>Χ2table and the probability p is less than 0,05 (level of confidente 0.95), then the hypothesis of the relationship between the dependent and independent variables is significant.If this condition is the opposite, the relationship is not significant.The obtained values of the Wald criterion for all models meet the specified condition, which indicates the statistical significance of the constructed models.Z-criterion is http://mmi.fem.sumdu.edu.ua/enThus, the nature of the functional relationship the indicators of innovative development of the country with the key determinants of the insurance market could be described by the following dependencies: − an increase of Patent applications by residents (Inv6) by 1% of the value of Outstanding Deposits, Insurance corporations, of which: Non-life insurance would increase by 2.53%, the value of Outstanding Deposits, Insurance corporations would increase by 3,62 %, indicator Insurance corporations, of which: Life insurance and annuities entitlements would increase by 1,02%; − increase of the Innovation index (Inv1) by 1% would lead to a decrease in Outstanding Deposits, Insurance corporations by 4,08%; − an increase of High technology exports (Inv4) by 1% of the value of the indicator Number of Policies, Insurance Corporations, of which: life insurance would increase by 0,6%; − an increase of Research and development expenditure (Inv2) by 1% Insurance corporations, of which: Life insurance and annuities entities would increase by 1,84%; − an increase of Information technology exports (Inv3) by 1%, The number of life insurance policies per 1,000 adults would increase by 0,81%.
Conclusions.The key study's hypothesis was to investigate a functional relationship between innovative development and critical determinants of the insurance market.Five multifactorial regression models with random effects for panel data were built.The study involved 17 countries in Eastern and Central Europe during 2004-2016.Principal Component Analysis allowed to select five indicators of insurance market development, which acted as dependent variables: Outstanding Deposits of Insurance corporations, of which: Non-life insurance; Outstanding Deposits of Insurance corporations; Number of Policies of Insurance Corporations, of which: life insurance; Insurance corporations, of which: Life insurance and annuities entitlements and Number of life insurance policies per 1,000 adults.The Research empirically confirms the above hypothesis.The insurance market development depends on the change in the level of innovation in direct proportion to both life insurance and nonlife insurance.Thus, the customeroriented model that exists in insurance should focus only on innovative products and sales channels and provide the insured with the opportunity to use more familiar (traditional) approaches.It is necessary to consider the fact that some barriers may arise for consumers: low level of trust in insurance companies and digital services, lack of stable Internet and mobile connection, territorial and demographic disparities in insurance, low financial literacy.Therefore, marketing and management in insurance in the digitalization of society should be a kind of hybrid -to combine traditional approaches to the business organization with an innovative approach.

Figure 1 .
Figure 1.The crusial stages of the life cycle of an innovative insurance product Sources: developed by the authors.
ui-individual effects of observations;εit-remnants of the model.Research of the current market situation Study of competitors and their market positioning Study of consumer needs Study of the quality of sales channels Assessment of reputational risks and product value Cost analysis for the development and implementation of a new product Determination of the planned loss, reward, payback period of the product Defining a project team to create a new product Development of insurance rules (tariffs, contract) Document processing Development of IT solutions Preparation of marketing materials Employee training Derivation of a new product and monitoring of planned indicators Assess the relevance of the real results of the business idea Transformation of a new product into the form of «as usual» Termination of project insurance in case of it of Innovations, 2021, Issue 2 235 http://mmi.fem.sumdu.edu.ua/enThere are two types of panel data models: the model with fixed (Fixed-effects model) and random (Random-effects model) effects.Wald test, Broysch-Pagan test, and Hausman test are used to determine the best variant of the panel model.Principal Component Analysis (PCA) selects the most relevant

Figure 2 .
Figure 2. Criteria of Kaiser Sources: compiled by the authors.The value of the cumulative variance is 80.6%.It corresponds to the three components, and the red line on the graph indicates the level above which there are also three components.Thus, a further selection of dependent variables would take place from three components.The next step in PCA is to represent the factor loads of the indicators included in each component.The following figure (Table3) shows only those variables whose factor loads are more significant than 0.3.