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Determinants of life insurance consumption across countries

Author

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  • Beck, Thorsten
  • Webb, Ian

Abstract

The importance of life insurance companies as part of the financial sector has significantly increased over the past decades, both as provider of important financial services to consumers and as a major investor in the capital market. However, the authors still observe a large variance in life insurance consumption across countries, which raises the question of its determinants. The authors use a greatly expanded data set on life insurance consumption to examine the determinants of the demand and supply of life insurance products across countries and over time. Using a cross-sectional sample of 63 countries averaged over 1980-96, the authors find that educational attainment, banking sector development, and inflation are the most robust predictors of life insurance consumption, while income is only a weak predictor. The results on educational attainment and inflation are confirmed in a panel of 23 countries over the period 1960-96. The results strengthen the case for promoting price stability, financial sector reform, and an efficient education system if life insurance and its many benefits are to be fully realized in an economy.

Suggested Citation

  • Beck, Thorsten & Webb, Ian, 2002. "Determinants of life insurance consumption across countries," Policy Research Working Paper Series 2792, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2792
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    References listed on IDEAS

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    Cited by:

    1. Relwende Sawadogo, Samuel Guerineau and Idrissa M. Ouedraogo, 2018. "Life Insurance Development and Economic Growth: Evidence from Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(2), pages 1-28, June.
    2. Arun, Thankom & Bendig, Mirko & Arun, Shoba, 2012. "Bequest Motives and Determinants of Micro Life Insurance in Sri Lanka," World Development, Elsevier, vol. 40(8), pages 1700-1711.
    3. Peter Haiss & Kjell Sümegi, 2008. "The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(4), pages 405-431, September.
    4. Bendig, Mirko & Arun, Thankom Gopinath, 2011. "Enrolment in Micro Life and Health Insurance: Evidences from Sri Lanka," IZA Discussion Papers 5427, Institute of Labor Economics (IZA).
    5. Elena Nebolsina, 2020. "The Impact of Demographic Burden on Insurance Density," SAGE Open, , vol. 10(4), pages 21582440209, December.
    6. Azitadoly Mohd Arifin & Abdul Aziz Jusoh & Azlul Kalilah Zaghlol, 2023. "A Cointegration Study of Life Insurance Demand in Malaysia," Information Management and Business Review, AMH International, vol. 15(1), pages 210-215.
    7. Focarelli, Dario & Pozzolo, Alberto Franco, 2008. "Cross-border M&As in the financial sector: Is banking different from insurance," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 15-29, January.
    8. Ilja Arefjevs & Tatjana Volkova & Marija Lindemane, 2013. "Defining The Market Potential By Assessing Growth And Saturation In The Private Life And Pensions Industry," Oeconomia Copernicana, Institute of Economic Research, vol. 4(4), pages 19-44, December.
    9. Mall, Sunita, 2017. "Contribution of insurance on Economic growth in India: An Econometric approach," Conference papers 332838, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Jiří Šindelář, 2016. "Quantitative Forecast of Demand for Life Insurance in CR in 2015-2018: Macroeconomic Growth versus Industry Restructuring [Kvantitativní prognóza poptávky po životním pojištění v ČR v letech 2015-2," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2016(1), pages 5-23.
    11. Hemrit, Wael & Nakhli, Mohamed Sahbi, 2021. "Insurance and geopolitical risk: Fresh empirical evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 320-334.

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