Law and the Determinants of Property-Casualty Insurance

APRA Working Paper No. 2001-08

35 Pages Posted: 13 Aug 2001

See all articles by Neil Esho

Neil Esho

Australian Prudential Regulation Authority

Ralf Zurbruegg

University of Adelaide; Financial Research Network (FIRN)

Anatoly Kirievsky

UNSW Australia Business School, School of Banking and Finance

Damian R. Ward

University of Bradford

Multiple version iconThere are 2 versions of this paper

Date Written: June 2001


This paper examines the importance of legal rights and enforcement in influencing property-casualty insurance consumption. We extend the existing literature by examining the role both legal and political factors have on determining insurance density across countries. Also, measures of risk aversion, loss probability and price, which overcome limitations of proxies used in the existing literature on insurance demand are analysed. Using a panel data set we apply the GMM dynamic system estimator, which relaxes the assumption of strict exogeneity of the regressors and produces unbiased and efficient estimates. The results show a strong positive relationship between the protection of property rights and insurance consumption, which is robust to various model specifications and estimation techniques. Moreover, the results show the purchase of nonlife insurance is significantly and positively related to risk aversion, loss probability and income, and negatively related to price.

Keywords: Insurance, Property Rights, Law

JEL Classification: G22, K11, K40

Suggested Citation

Esho, Neil and Zurbruegg, Ralf and Kirievsky, Anatoly and Ward, Damian, Law and the Determinants of Property-Casualty Insurance (June 2001). APRA Working Paper No. 2001-08, Available at SSRN: or

Neil Esho (Contact Author)

Australian Prudential Regulation Authority ( email )

Level 26, 400 George Street
Sydney, New South Wales 2052
+612 9210 3345 (Phone)
+612 9210 3418 (Fax)

Ralf Zurbruegg

University of Adelaide ( email )

233 North Terrace
Department of Finance
Adelaide SA 5005
+61 8 8303 5535 (Phone)
+61 8 8303 4368 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane

Anatoly Kirievsky

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
612 9385 5858 (Phone)
612 9385 6347 (Fax)

Damian Ward

University of Bradford ( email )

School of Management Emm Lane
Bradford BD9 4JL, West Yorkshire
United Kingdom
01274 233194 (Phone)

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