“The methodical approach to the establishment of interdependencies in the development of insurance and tourism markets”

In the recent years tourism market belongs to the sphere of interests of insurers. Insurance companies are interested in increasing tourist flows while tourist companies are interested in providing quality insurance of their services, especially those services which are related to international tourism. On the basis of economic and mathematical methods (structural analysis, the Savage method) the article studies interdependencies in the functioning of insurance and tourism markets. The relationship is determined by using the examples of the markets in Ukraine, France and the United States.


Introduction 1
In the recent years there is an increase in the sales of products by insurance companies which are associated with the risks from certain types of tourist activities. These include accident insurance, insurance against cancellation\interruption of tours, health insurance, medical expenses insurance, insurance against terrorist attacks during travels, carrier liability insurance, insurance against the risk of the complete cessation of companies' activity because of the inability to organize tourist travels due to force majeure circumstances, etc.
In 2013, the share of tourism in the world GDP amounted to more than 2300 billion dollars (in 2012 -2.056 trillion dollars). In 2012 the global revenues from international tourism totaled 1.243 trillion dollars while investments in the tourism industry stood at 4.7% of the general volume of world investments amounting to 764.7 billion dollars. According to the report of the Secretary-General of the World Tourism Organization (UNWTO), which was presented at the 57th session of the UNWTO Commission for Europe on April 4, 2014 in Baku (Azerbaijan), in 2013 the number of tourist arrivals increased by 5% compared to 2012 and exceeded 1 billion people.
Considering the mandatory insurance of those traveling abroad, with the growth of world tourist flows there is an increase in the number of the concluded insurance contracts. Recent studies of the insurance market suggest that the volume of travel insurance in the world among other types of insurance has increased by 20% overall. Insurers, as subjects of entrepreneurial activity, respond to market changes and focus their attention on expanding the number of insurance products in tourist insurance. In this context it is important to understand the development trends of the insurance and tourist markets in the world and how these markets influence each other. Olga Kozmenko, Dariya Abramitova, 2015.

Analysis of the recent research and publications
In the economic literature the functioning of the insurance market has been highlighted in the works of such scholars as L. Van den Berghe [12], J.D. Cummins [1,2], S. Kozmenko [8], O. Kuzmenko [9], S. Lumpkin [10], I. Falautano [5] and others. There has been much less research conducted in the area of tourism insurance. This is explained by the fact that tourism insurance is not specifically defined among the types of insurance.

Earlier unresolved parts of the problem
The prospects for cooperation of insurance and tourist companies require a deeper analysis. Particularly interesting is the establishment of the correlation levels between the development of insurance and tourism markets (integral indicator) and individual indicators of these markets.

Goal of the research
To offer a scientific and methodical approach, which, by using the methods of economic and mathematical modeling, will provide an opportunity to assess the interdependence of the insurance and tourism markets.

The main results of the research
Today tourism, especially international tourism, is one of the fastest growing sectors of the world economy. This market accounts for 9% of the global GDP, 6% of exports, every 11th job. According to the UNWTO, international tourism will keep developing rapidly in the future. In 2020, the number of travelers will reach 1.6 billion people a year, i.e. it will increase by 2.4 times compared to the beginning of the century. Regarding the tourism revenues, the UNWTO estimates their growth by 4.3 times compared to 2000. It is expected that from 2010 to 2030 the demand will grow by 3.3% and will reach 1.8 billion arrivals. The developing countries will increase their market share from 30% in 1980, 47% in 2012 to 57% in 2030. In 2013 the leading positions in terms of the number of arrivals were occupied by Southeast Asia (+ 10%), Central and Eastern Europe (+ 7%), Southern Europe and the Mediterranean (+ 6%), North Africa (+ 6%) [7].
There is a growth of the share of mass tourism in the tourist flows, which is associated with a reduction in consecutive vacation days and increase of their frequency, low cost airlines, the use of charters, the growth of jobs in mass tourism and so on. The prevailing "suppliers" of tourists to the international markets are the developed countries of Europe (primarily -the UK), America and Asia-Pacific region.
Europe is a leader in the number of arrivals of international tourists, because of the proximity of a large number of small countries (short trips), the developed infrastructure, the high level of transport services, the availability of natural and cultural monuments of world importance, a wide range of tourism products, highly qualified staff, etc. [11].
It should be emphasized that in the developed countries significant attention is paid to the mobilization of sufficient financial resources to carry out preventive measures to prevent risks in tourism, improve the system of losses regulation and insurance payment through the creation of specialized insurance pools, catastrophe reserves and warning systems. Risks arise immediately when tourists go abroad (climate, food, living conditions, social and cultural structure). Also, it is necessary to keep in mind the international nature of transactions on tourist services, the fact that many business entities are involved in the process of providing tourism services.
Since insurance companies are business entities, their main purpose is to increase capital and maximize profits. One way to improve profitability is to expand their customer base and create new insurance products. From this perspective, the development of tourism insurance is the possibility to guarantee profit maximization. Thus, one could argue about the financial benefits from cooperation of insurance companies with the entities of the tourism market, and in a global sense -from cooperation of the subjects of insurance and tourism markets.
Within this paper it is offered to assess the cooperation prospects of the insurance and tourism markets by using the examples of the USA, France and Ukraine. As the main instrument for assessing the interdependence between the insurance and tourism markets we offer a structural analysis which is based on the reflection of permanent internal connections between the elements of the researched objects, with consideration of its properties, invariance, integrity and dynamism. To solve this problem in the static form we have decided to use the algorithm presented in Figure 1 (see Appendix).
In our calculations we have used the data presented on the websites of the World Statistics (World Statistics.org) [13], the World Health Organization [6], the State Statistics Service of Ukraine [4], the State Commission for Regulation of Financial Services Markets [3]. Information on Ukraine, France and the United States in the period between 2000 and 2013 is presented in Tables 1-3 (see Appendix).
It is evident that the choice of the indicators to characterize the markets (X 1 -X 18 ) is not completely successful. Ideally, this should have been a much wider range of indicators for each market with more specific indicators, but apart from the relevance it was also caused by the fact that for these indicators the statistics could be obtained from the open sources.
By using the structural modeling and the "Statistica" software we receive the regression model and the system of equations describing the interdependence between indicators and structurally describing the interdependence between the markets.
The iterative process, particularly for the data on Ukraine, was successful, the values of ICSF Criterion and ICS Criterion were close to zero, the values of the Discrepancy Functions were low, and the values of Maximum Resedual Cosine and the Maximum Absolute Gredient were close to zero. All of these factors indicate the model's adequacy. The next step in the analysis of interdependence of insurance and tourism markets could be the following scientific and methodical approach that makes it possible to estimate the level (depth) of partnership (interpenetration) of these markets through the gradual application of several mathematical models (Fig. 2). During the calculation of the level of partnership we have used the statistical data presented in Table 4.     4  ,  15  ,  14   2  ,  13  4  ,  12  3  ,  11  ,  8  3  ,  7  ,  6  1  ,  5  ,  4  4  ,  3  1  ,  2   As a result of the calculations we obtain the indicators of the levels of integration of insurance and tourism markets in the studied countries (Table 5). Previously, we have considered the interaction of insurance and tourism markets in certain countries. Further, we will try to assess the level of cooperation in the tourism sector (the level of tourist exchanges). We propose to determine the indicator of tourist attraction of countries ( ij RL ), which is determined by considering the indicators of the level of partnership of insurance and tourism markets in these countries. To solve this problem we use the method of gravity modeling, which describes the social and economic interaction between spatial objects (cities, regions, countries, etc.). S ti-1 is the number of tourist arrivals in the year t in country j; t is the year for which the estimates of tourist arrivals in country j are made; ti S is the average rate of changes in the number of tourist arrivals for country j, weighted by the rate of time change; N is the number of years of the analyzed time period; g is the average rate of changes in the number of tourist arrivals, weighted by the rate of time change; 2 ij R is the square of the distance between countries and j; S is an absolute increase in the number of tourist arrivals; S S / is the rate of change in the number of tourist arrivals; t t / is the rate of time change.
The results of the calculations are presented in Table 6.

Conclusions
In establishing the dependencies between insurance and tourism markets the highest results were demonstrated by France and Ukraine. As for the calculation of the partnership level, the lowest level was discovered for Ukraine. Graphical results demonstrate unstable development of insurance and tourism markets, a high degree of volatility and significant decline for the insurance market The results of calculations of tourism indicators revealed that their highest level was observed between the European countries, such as Ukraine and France. The distance between these countries is the smallest and the coordination takes place in the same geographic area -in the European region, hence the legislation basis and the public pressure on the functioning of insurance and tourism markets tend to achieve unification and standardization.