What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries

45 Pages Posted: 20 Apr 2016

See all articles by Erik Feyen

Erik Feyen

World Bank - Finance & Markets Global Practice; Ahead Analytics Inc

Rodney R. Lester

World Bank

Roberto de Rezende Rocha

World Bank - Middle East & North Africa Region; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2011

Abstract

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.

Keywords: Debt Markets, Insurance Law, Emerging Markets, Insurance & Risk Mitigation, Economic Theory & Research

Suggested Citation

Feyen, Erik H. B. and Lester, Rodney R. and Rocha, Roberto de Rezende, What Drives the Development of the Insurance Sector? An Empirical Analysis Based on a Panel of Developed and Developing Countries (February 1, 2011). World Bank Policy Research Working Paper No. 5572. Available at SSRN: https://ssrn.com/abstract=1774419

Erik H. B. Feyen (Contact Author)

World Bank - Finance & Markets Global Practice ( email )

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Washington, DC 20433
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+1 (202) 458 2038 (Phone)
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Ahead Analytics Inc ( email )

Washington, DC
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HOME PAGE: http://www.aheadanalytics.com

Rodney R. Lester

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Roberto de Rezende Rocha

World Bank - Middle East & North Africa Region ( email )

1818 H Street N.W
Washington, DC 20433
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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