Relationship and mutual influence between poverty and insurance in a developing insurance market

Abstract

The “number one” goal of sustainable development today is to end poverty. The creation of effective methods and tools for this purpose would require a thoughtful investigation on poverty and its mutual effects. The present study seeks to identify the relationships and interdependencies between the key financial characteristics of low-income households and their propensity for insurance purchase under the scenario where the insurance product can reduce the likelihood of catastrophic expenses. The study relies on the time series model to analyze statistical information from the RF Federal State Statistics Service on the average insurance premiums and the financial characteristics of households over the period from 2000 to 2019. Based on the results of the analysis, the first hypothesis holding that insurance and household income are related (H1) was refuted, whilst the second hypothesis that insurance is related to household savings (H2) was confirmed. The present findings will be of interest to the practical sector of the economy, including managers employed in insurance companies, as a platform for designing low-income insurance products. The findings will be useful to state and municipal employers who develop poverty reduction and/or elimination measures and to academic researchers by opening up new avenues for research.