Can top-pollutant economies shift some burden through insurance sector development for sustainable development?

Abstract

Economists have long documented the significance of insurance markets in the development process. This study considers the nonlinear impact of insurance sector development on CO2 emissions for five high-polluting economies over data ranging from 1990 to 2019. The present study employs a panel and time series NARDL framework. We find that insurance sector development has asymmetric effects on CO2 emissions. It is inferred from the findings that a positive shock in insurance sector development increases CO2 and a negative shock in insurance sector development decreases CO2 in the long run in high-polluting economies. Regarding country-wise analysis, we also observe that a positive shock in insurance sector development increases CO2 in the USA, Russia and Japan, but a negative insurance sector development shock decreases CO2 in the USA and India in the long run The results recommend some important policy implications.