Law and the Determinants of Property-Casualty Insurance

19 Pages Posted: 6 Jul 2004

See all articles by Neil Esho

Neil Esho

Australian Prudential Regulation Authority

Anatoly Kirievsky

UNSW Australia Business School, School of Banking and Finance

Damian R. Ward

University of Bradford

Ralf Zurbruegg

University of Adelaide; Financial Research Network (FIRN)

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This article examines the importance of legal rights and enforcement in influencing property-casualty insurance (PCI) consumption. We extend the existing literature by examining the role of legal factors in 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 analyzed. Using a panel data set, we apply a generalized methods of moments 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 PCI is significantly and positively related to loss probability and income, as well as providing weaker evidence of a negative relationship with price.

Suggested Citation

Esho, Neil and Kirievsky, Anatoly and Ward, Damian and Zurbruegg, Ralf, Law and the Determinants of Property-Casualty Insurance. Available at SSRN:

Neil Esho (Contact Author)

Australian Prudential Regulation Authority ( email )

Level 26, 400 George Street
Sydney, New South Wales 2052
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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)

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

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