European insurance markets in the face of the financial crisis of 2007

The insurance sector plays a crucial role in overall economic development. The published literature has not definitively confirmed the influence of insurance development on economic growth however we may assume that the influence is positive. This data is gathered from publications from the World Bank, European Union (EU) Commission, National Polish Bank, EU statistics offices, and insurance associations. The paper aims to present the results of an assessment of insurance sector development in European countries. The study compares the development of insurance sectors in countries like Portugal, Italy, Greece, and Spain to mature markets countries like the UK and Germany during the financial crisis. We look at market development especially from the product innovation point of view. The insurance market in specific countries is assessed using taxonomy methods especially two main measures: the distance and similarity measures. The markets are described by a set of features divided into five groups: market structure, technical sphere, finance and investment, effectiveness and product. The authors have calculated measures at two points in time for 1997 and 2013. The comparison between the level of taxonomic measures at these two time points leads the authors to conclude that the financial crisis has slowed the speed of development and influenced other spheres significantly. In countries like Greece and Portugal, progress was even slower than in post-Soviet countries like Poland. External conditions have not imposed structural changes within chosen insurance markets. However the general environment was conducive to supporting enlargement of insurance markets until 2007. The influence of a crisis is really visible. The final conclusion is that the sectors were not as innovative, mainly in the product sphere. Product innovations give the insurer an opportunity to play an important role in contributing to sustainable development on a macroeconomic scale, or even on the global scale. We are convinced that during the age of innovation, the insurance sphere cannot remain insensitive to the need for innovation in the areas of insurance company operation and in the product area. Innovations within the insurance sector become even more important in terms of injecting competition into the markets.