Research Article Open Access

Cash Flow Management at the Insurance Company Aimed at Provision of Financial Stability

Elena Knyazeva1, Larisa Yuzvovich1, Elena Smorodina1, Valeria Fomenko1 and Vadim Katochikov2
  • 1 Yeltsin Ural Federal University, Russia
  • 2 Directorate of Sverdlovsk Area, Russia
American Journal of Applied Sciences
Volume 13 No. 6, 2016, 794-803

DOI: https://doi.org/10.3844/ajassp.2016.794.803

Submitted On: 21 December 2015 Published On: 24 June 2016

How to Cite: Knyazeva, E., Yuzvovich, L., Smorodina, E., Fomenko, V. & Katochikov, V. (2016). Cash Flow Management at the Insurance Company Aimed at Provision of Financial Stability. American Journal of Applied Sciences, 13(6), 794-803. https://doi.org/10.3844/ajassp.2016.794.803

Abstract

The insurance market of the Russian Federation is currently demonstrating the trend of slower growth rate of insurance premiums and problems, rising in certain sectors. The loss ratio of insurance operations is increasing along with reducing profitability of internal funds and assets, operational costs are growing. All these factors affect the financial stability of insurance companies and reduce the profitability of insurance business. There is no doubt that maintaining financial stability of insurance companies in the Russian insurance market under current conditions is an extremely important issue since this sector maintains stability of economic subjects in the most difficult economic situation, ensures the continuity of social reproduction and acts as the main provider of long-term investments to the country’s financial market. To keep their position on the market, the insurance companies should pay special attention to maintaining stable positive cash flow and reducing the cash outflow. The approach to cash flow management in the insurance company proposed in the article accounts for existing challenges and opportunities can maintain the financial equilibrium of the company and can improve the efficiency of performance as well as reduce the need for debt capital and the insolvency risk of the insurer. The purpose of work is to identify the problems of financial stability and cash flow management in the insurance company and to develop practical recommendations aimed at addressing these problems based on generalization of the theoretical aspects and analysis of financial indicators. The scientific novelty of the research is in developing theoretical and methodological provisions and elaborating practical recommendations in the field of the insurance company’s cash management in order to ensure financial stability.

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Keywords

  • Cash Flow
  • Insurance Companies
  • Financial Stability