What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries
The insurance sector can play a critical role in financial and economic development. By reducing uncertainty and the impact of large losses, the sector can encourage new investments, innovation, and competition. As financial intermediaries with lon...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110223115546 http://hdl.handle.net/10986/3339 |
| Summary: | The insurance sector can play a critical
role in financial and economic development. By reducing
uncertainty and the impact of large losses, the sector can
encourage new investments, innovation, and competition. As
financial intermediaries with long investment horizons,
insurance companies can contribute to the provision of
long-term instruments to finance corporate investment and
housing. There is evidence of a causal relationship between
insurance sector development and economic growth. However,
there have been few studies examining the factors that drive
the development of the insurance industry. This paper
contributes to the literature by examining the determinants
of insurance premiums (both life and non-life premiums) and
total assets for a panel of about 90 countries during the
period 2000-08. The results show that life sector premiums
are driven by per capita income, population size and
density, demographic structures, income distribution, the
size of the public pension system, state ownership of
insurance companies, the availability of private credit, and
religion. The non-life sector is affected by these and other
variables. While some of these drivers are structural, the
results also show that the development of the insurance
sector can be influenced by a number of policy variables. |
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