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On the macrofinancial determinants of life and non-life insurance premiums

Author

Listed:
  • Martin Hodula

    (Czech National Bank
    Technical University of Ostrava)

  • Jan Janků

    (Czech National Bank
    Technical University of Ostrava)

  • Martin Časta

    (Czech National Bank
    Prague University of Economics and Business)

  • Adam Kučera

    (Czech National Bank)

Abstract

This paper tests potential determinants of the development of the insurance sector. Using a rich dataset for 24 European countries spanning two decades, we identify a set of macrofinancial factors that are the most robust predictors of growth of gross premiums in the life and non-life insurance sectors. We show that both life and non-life premiums co-move with the business cycle and are positively related to higher savings and a more developed financial system. In addition, we provide new evidence on the role of market concentration and price effects. We find that market concentration matters only for life insurance, whereas the price channel is significant only for non-life insurance. From a policy perspective, our empirical estimates can be used to refine the existing macroprudential stress tests of the insurance sector.

Suggested Citation

  • Martin Hodula & Jan Janků & Martin Časta & Adam Kučera, 2023. "On the macrofinancial determinants of life and non-life insurance premiums," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(4), pages 760-798, October.
    • Handle: RePEc:pal:gpprii:v:48:y:2023:i:4:d:10.1057_s41288-021-00249-z
    DOI: 10.1057/s41288-021-00249-z
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    References listed on IDEAS

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    Cited by:

    1. Lee, Hangsuck & Ha, Hongjun & Lee, Minha, 2024. "A sharing rule for multi-period interest-sensitive insurance contracts," The North American Journal of Economics and Finance, Elsevier, vol. 71(C).

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