Econometric Modelling of the SMTP Insurance in Russia

The system of compulsory vehicle insurance has been recently introduced in Russia. The regulation system of this sphere is extremely unstable, discussions of optimal parameters of insurance are observed in the Russian government since the introduction of the kind of insurance. Adherence to existing system of insurance market will lead to overvalued payments for drivers and increased burden for insurance companies up to bankruptcy. New model of insurance tariffs is needed which includes regional differences as economic development has a great impact on people’s awareness to buy a vehicle and offer a service for it. For constructing a model regression, cluster and correlation analysis and methods of spatial econometrics were applied. As a result, a set of variables were chosen to have an essential influence on insurance tariffs and estimations of final model were found. The study consists of three sections. Firstly, an overview of previous studies is presented to observe existing knowledge for the problem and overall situation in insurance market is described. Secondly, regional differences are proven to be kept in mind while constructing models. Then spatial effects among regions are detected and should be included in models for a better quality.