Solvency risk management in insurance company

Abstract

In modern economic conditions, insurance companies area very important factor in the development of the financial markets and the overall economic development of a country. If we assume that the key strategy of every insurance company is the improvement of competitiveness of their insurance services, an increase of market share and a rise in profit, the question is, how can these (at times, conflicting)objectives be achieved in the most efficient way.Besides the traditional approach of extending insurance portfolio, and simultaneoulsy the total assets of the insurance business, the main precondition for strengthening the insurance company's position on the market is a high-quality management of risks encountered in the course of its business operations. Apart from the analysis and survey of potential risks, special attention should be paid to solvency risk management, which is one of the most significant elements in risk management generally. With a view to better understanding this risk, we will quantify it by means of the solvency ratio observed in the insurance industry of the Republic of Serbia over a four-year period.