Insurance Market Activity Research Articles

The Impact of Culture on the Demand for Non-life Insurance Penetration in Developing Countries: Panel Data Analysis

Purpose: The impact of insurance market activity within financial development is gaining more attention in academia, as the sector experiences growth within emerging markets. The paper aims to understand which macro-economic and social variables impact the growth or decline of the non-life insurance sector broadly across European countries with a view to provide recommendations to drive increased penetration across the region.
 Methodology: Using Fixed Effects Panel Data Regression and annual data from 1990 to 2021 on 10 countries, the study examines the explanatory factors of non-life insurance demand in European countries (Australia, France, Austria, Italy, Canada, Luxemburg, Denmark, Norway, Finland and Portugal).
 Findings: The study found that GDP, and urbanization and education rates have a significant negative impact on non-life insurance penetration and density; urbanization, religion, education level and rule of law can explain positively variation in non-life insurance density and penetration across countries. Countries with higher urbanization levels, higher education level, Christian or Buddhist beliefs and more effective rule of law spend more on non- life insurance than other countries. The control of corruption and government effectiveness explain negatively variance in non-life insurance.
 Unique Contribution to Theory, Practice and Policy: Notably, governments can develop the non-life insurance sector through policies that support urbanization.Similarly, ensuring an environment that promotes economic freedom (such as low tariff, high personal choice, low government spending and high security of property rights) could be an effective way of promoting non-life insurance demand. In contrast, policies that help to reduce the rate of urbanization may yield a double dividend: less population and congestion in cities and better opportunities for the development of non-life insurance markets. Also, countries with high level of education, can develop the development of non- life insurance demand. Among many socio-economic factors such as income, urbanization and education level, our analysis suggests that cultural dimensions such as beliefs and rule of law play a role.

The Innovative Impact of Insurance for Economic Growth: The Evidence from New EU Member States

Abstract Insurance market activity, both as a financial intermediary and a provider of risk transfer and indemnification, may contribute to economic growth by allowing different risks to be managed more efficiently and by mobilizing domestic savings. During the last decade, there has been faster growth in insurance market activity, particularly in emerging markets given the process of liberalization and financial integration, which raises questions about its impact on economic growth.The aim of this paper is to examine relationship between insurance sector development and economic in 11 new EU member states from CentralandEasternEurope, using annual data fortheperiod 1999-2018. We apply dynamic and fully modified ordinary least squares to estimate the relationship between the variables. The results of our study indicate there are a positive and a significant relationship between insurance, measured through penetration, and economic growth Thus, functions of insurance companies - providing means of risk management and performing mobilization and allocation of resources - are important for economic growth and is in line with previous studies and with our hypothesis These results could be useful for regional governments that seek to improve economic growth as they suggest the need for implementation of stimulative policies for the development of insurance industry

Re-investigating the insurance-growth nexus using common factors

This study re-investigates the linkage between insurance market activity and economic activity by using panel cointegration techniques. The methodology used here accounts for the presence of cross-sectional dependence. Considering nine panels formed from the data of 90 countries, we find evidence in favor of panel cointegration among real insurance market activity per capita and real GDP per capita.

Insurance and foreign direct investment: a review (or lack) of evidence

Foreign participation in insurance markets is related to various streams of literature, including foreign direct investment (FDI) and international trade in insurance services. Only a few papers have examined the potential role of FDI in insurance services. Similar to the banking literature, some papers have explained the factors contributing to foreign entry in a single country or the determinants of FDI-preferred locations. Other papers have examined the impact of foreign entry on the host country sector or the relationship with insurance development and insurance market activities. Our purpose is to review the empirical literature on the relationship between FDI and insurance services.

ЗАГРОЗИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ СТРАХОВИХ КОМПАНІЙ УКРАЇНИ У ПЕРІОД ПАНДЕМІЇ COVID-19

The current state, opportunities and prospects of development of the insurance services market in Ukraine are reviewed in the article. Various factors and objective circumstances influence on the development of the world and national insurance services markets. The priority feature of the national and world economy development during recent years is the globalization of financial institutions. The capitals’ movement is the substantial basis of integration and globalization processes. The insurance market is an integral part of the national financial market, so it primarily affected by globalization. This market reacts almost instantly to dynamic processes in the global economic environment and reflects the main trends that determine the formation of modern insurance space. Current crisis differs from the previous one by the significant restrictions for free movement due to the pandemic. The aim of the study is to estimate the most necessary adaptive and transformational changes for insurance companies to ensure their functioning in Ukraine taking in account factors caused by the pandemic. The domestic insurance market has many negative challenges. The issue of quarantine imminent consequences and it affection on the participants of the insurance market is equally important. The limitations and restrictions for the free movement is the main feature of crisis under the pandemic. The impact of external and internal factors on insurance market activity in Ukraine analyzed. The decreasing of the number of insurance companies through objectively-direct consequences of pandemic determined. The set of the medical insurance programs aimed at the case of COVID -19 that offered by Ukrainian insurance companies reviewed. Results of the operating insurance programs estimated. The legislative changes in the insurance sphere caused by a pandemic analyzed. All necessary measures for defense and support people in pandemic implemented by the government. The current and potential threats & possibilities that allow to save and fix insurance companies positions at the insurance services market grounded.

КОНЦЕПТУАЛЬНИЙ ПІДХІД ФОРМУВАННЯ МАРКЕТИНГОВОЇ СТРАТЕГІЇ СУБ’ЄКТІВ СТРАХОВОГО РИНКУ В УМОВАХ ЦИФРОВОЇ ЕКОНОМІКИ

Modern conditions of economic subjects of insurance market activity require prompt reaction on changes by development and realization of concrete measures and, finally, achievement of final aim of activity – making profit and long-term functioning of enterprise due to the ability of personnel to implement the strategic marketing plans of enterprise. It has been found out that the effective functioning of the insurer depends on the ability to transform and react to the market trends as quickly as possible. Modern marketing solutions involve the constant active use of innovation. With this in mind, a digital marketing strategy is understood as a marketing plan with the use of innovative digital technologies, methods, tools that ensure the company’s presence in online and offline environments, as well as interactive interaction with consumers. The aim of the research is to determine the directions of formation of marketing strategy and the factors influencing fundamental decisions concerning the choice of the direction of development and management of the enterprise and to develop a conceptual model of formation of marketing strategy of the subjects of the insurance market in the conditions of digital economy. The given model is based on the use of methods of system analysis and allows providing forming of marketing strategy of subjects of insurance market taking into account estimation of personnel possibilities for effective realization of the chosen strategy. Today the activity of subjects of the insurance market of Ukraine depends primarily on the ability to transform and react as quickly as possible to market trends and customer requirements. Development of the company depends on the correctly chosen strategy, on understanding the “place” of the company in the market and among competitors, on the real assessment of internal resources and potential and effective management of its marketing activities. Modern marketing solutions envisage constant active use of innovations. The correct organization of the marketing service can ensure the timely receipt of the necessary and reliable information that will allow the insurance company to effectively carry out insurance, reduce losses, attract new customers and introduce new insurance services. The process of introducing marketing into the insurer’s activities should be carried out sequentially.

UKRAINIAN PROPERTY INSURANCE MARKET PERFORMANCE

The modern insurance market of Ukraine, in comparison with foreign countries, shows rather low development indices. However, the role of insurance in the financial development of the state is one of the determining factors, as it is possible to achieve equal distribution and redistribution of financial resources, to ensure reduction of state expenses in case of emergency situations and effective development of social protection. Purpose. The purpose of the article is the research of a condition and features of functioning of the property insurance market in Ukraine at the present stage. As a result of the conducted research it became possible to emphasize the problem points of insurance activity performance as a whole and property insurance in particular. It has allowed to designate prospects of optimization of activity of the given segment of the national insurance market. Methodology. In course of the research the following methods were used: dialectical method – to clarify the importance of the studied issue among the scientists; horizontal analysis method – to consider the dynamics of indices of property insurance market performance by certain types of insurance objects; vertical analysis method – to determine the role of property insurance sector in the insurance market of Ukraine; induction method – to draw conclusions. Results. Indices of the insurance market activity in Ukraine are analyzed and the basic tendencies of its development are defined in the article. From the critical position the peculiarities of functioning of the property insurance sector were assessed: both within the segment by types of insurance objects and in general, against the background of other types of insurance. The analysis made it possible to identify the problematic aspects and drawbacks of the property insurance activity that contributed to the development of offers on improvement of insurance activity in the property insurance sector. Practical significance. The practical application of the proposed methods of reducing gaps in property insurance would make it possible to increase the potential of the state insurance market and facilitate the growth of the level of confidence of the population in insurance as an instrument of their own security and equalization of their financial position in case of unexpected events.

Examining the Effect of Globalization on Insurance Activities in Large Emerging Market Economies

This study applies the cross-sectionally augmented distributed lag long-run estimation technique alongside bootstrap panel Granger causality testing to examine the impact of globalization on insurance market activities in large emerging market economies. Economic, social and political globalization indices are considered separately. Two alternative measures of globalization (de facto and de jure) are also used in each case for our estimations. The empirical results confirm the following; first, empirical outcomes are slightly sensitive to the choice of globalization measure used. Second, cross-sectional dependence and cross-country heterogeneity exist among large emerging market economies. Third, causality varies across large emerging economies with different conditions. We make a case for de facto measures as the most appropriate since they reflect actual practices rather than policy claims. We thus reach the conclusion that all dimensions of globalization positively impact life and non-life insurance density.

Development of financial market activities and economic growth: A cross-country evidence

This paper examines the relationship between insurance market development and economic growth and various conditions that affect the insurance-growth nexus. The conditions tested are degree of financial development, banking activity, and demographic profile of a country. The empirical study uses cross country panel data from 90 countries for the period 1995 to 2015 and applies Hausman–Taylor random effect model. The main findings confirm a positive non-linear relationship between insurance market development and economic growth. The study also finds the impact of banking and stock market developments reduce the positive effect of insurance market activities on economic growth implying these activities are substitutes for insurance market promoting economic growth. Two major contributions for this study are: (i) it tests the hypothesis that the impact of insurance development on economic growth is non-linear, which implies at a higher level of economic development increased insurance spending would reduce economic growth; and (ii) it tests the hypothesis whether banking development and stock market activities are substitute or complement to insurance market development in the economic growth process.

НАПРЯМИ ВДОСКОНАЛЕННЯ РЕГУЛЮВАННЯ РИНКУ СТРАХУВАННЯ

Проаналізовано стан ринків небанківських фінансових послуг на прикладі діяльності ринку страхування. Виявлено особливості та напрями його розвитку. Розглянуто функціонування страхових компаній на ринку України та показники страхової діяльності за 2018 р. і на початку 2019 р. На основі аналізу визначено проблеми діяльності страхового ринку, які стримують його розвиток. Страховий ринок України поступово просувається в позитивному напрямі, має значний потенціал для подальшого розвитку, але поки що істотно поступається аналогічним ринкам демократично та економічно розвинутих країн. Досліджено роль ринку страхування в соціально-економічному розвитку регіонів. Показано, що стабільність у функціонуванні ринку послуг страхування прямо залежить від стану економіки України, ВВП, розмірів середньої заробітної плати та середньої пенсії. Головним фактором, який стримує швидке зростання цього ринку, є низький платоспроможний попит населення на страхові послуги. Специфіка страхового ринку потребує, поряд з розглядом цього сектору небанківських фінансових послуг у цілому по державі, ще й деталізації нюансів діяльності суб'єктів, які функціонують у регіонах України. Для підвищення захисту споживачів страхових послуг органам державного регулювання необхідно вжити заходів щодо звільнення ринку від проблемних, неплатоспроможних, недобросовісних страхових компаній, а також встановлення економічно обґрунтованого рівня винагороди посередникам і регламентування їх діяльності.Головне завдання на шляху розвитку інституцій небанківських фінансових послуг, зокрема, ринку страхування полягає в підвищенні довіри до них з боку громадян України та в інтеграції нормативно-правової бази у цій сфері в європейську законодавчу систему. Показано, що основним завданням подальшого розвитку зазначених ринків у країні є підвищення їх прозорості, капіталізації, ліквідності.Розглянуто показники концентрації вітчизняного страхового ринку. Проаналізовано зв'язок між концентрацією ринку та кількістю страхових компаній на ньому. Для покращення глибини і достовірності оцінки концентрації на страховому ринку України пропонується ввести коригуючі коефіцієнти до граничних значень індексу Герфіндаля – Гіршмана.

Insurance-growth nexus in Africa

Economic growth may be influenced by insurance market activity through risk pooling, financial intermediations, indemnification against losses, mobilisation of savings and provision of investment opportunities. Over the past few decades there has been increasing interest in the role of the insurance sector in the economic growth of Africa. This study examines whether there is a relationship between the continent’s economic growth and insurance market activity (life, non-life, and total). Applying panel estimation techniques that are robust to heterogeneity and cross-sectional dependence to a model of panel data for 11 African countries between 1995 and 2016, we find significant evidence in support of such a relationship. Total insurance penetration has a long-term impact on economic growth, and when disaggregated into its components (life and non-life-insurance penetration), we find evidence in support of short-term and long-term impacts on economic growth in both cases. Our study also confirms the feedback hypothesis, as we find a positive, bidirectional causality between insurance market activity and economic growth. We also find that the contribution from non-life insurance market activity towards economic growth far outweighs that of life insurance market activity.

On cointegration between the insurance market and economic activity

Recent literature mainly examines the causal relationship between the insurance market and economic activity, while agreeing on presence of cointegration. The bulk of this evidence relies on Pedroni’s (Econom Theory 20(03):597–625, 2004) very popular residual-based panel cointegration test. However, this test not only requires that the number of time periods is large, but also that it is large relative to the number of cross section units. In this paper, we demonstrate that violating this requirement leads to Pedroni’s test over-rejecting the null hypothesis of no cointegration. We then re-investigate cointegration between insurance market activity and real output using a dataset covering 49 countries over 36 years. While Pedroni’s test rejects the null, using a more suitable test procedure yields no evidence of cointegration. This suggests that much of the earlier evidence should be re-evaluated. Equally important, if the evidence on cointegration is misleading, then subsequent causality results are also likely to be misleading.

The Role Of Insurance Market Activity In Boosting The Growth Of The National Economic System

The Role Of Insurance Market Activity In Boosting The Growth Of The National Economic System

Insurance activity and economic performance: Fresh evidence from asymmetric panel causality tests

AbstractInsurance plays a fundamental role in any modern economy, but the literature has not accounted for the potential asymmetric causal impacts from the dynamic interaction between the insurance market and economic performance. This paper aims to fill this gap by studying the causal relationship between several measures of insurance per capita and real GDP per capita in the G7 countries over the period 1980–2014 via asymmetric panel causality tests. Our results show that insurance market activity and economic performance exhibit bidirectional causalities, but their direction, intensity and significance are different due to distinct market situations. In general, insurance activity plays a passive role in economic performance, while economic performance has a significant role in insurance activity. These findings offer several useful insights for policy makers and researchers.

Insurance activities, globalization, and economic growth: New methods, new evidence

This paper applies the most up-to-date non-parametric framework to investigate the non-linear linkage between insurance market activities, globalization, and economic growth using a pooled sample of 38 countries. Our empirical results first reveal that all variables are relevant to the economic growth equation, but most variables enter the model non-linearly, thus justifying the use of non-parametric methods. Second, most of the partial effects of globalization are positive for a poor performing economy (in terms of the levels of education, initial income, and globalization), while the partial effects are negative for those of a better performing economy. As to whether and how insurance market and globalization exert an influence on economic growth under different conditions, we find that a positive effect of globalization on economic growth does exist under a lower level of insurance activities, while it has a negative effect for those higher levels of insurance activities. Finally, the partial effects of the insurance sector on economic growth are negative in almost all cases. These findings offer several useful insights for policy-makers and researchers.

Insurance–growth nexus and macroeconomic determinants: evidence from middle-income countries

This paper examines the causal relationships between insurance market activities, economic growth, financial depth, and government consumption expenditure. We utilize a panel vector autoregressive model to test Granger causality for 18 middle-income countries over 1980–2012—a group that has not been previously studied in this literature. The results show a robust long-run economic relationship between insurance market activities, economic growth, financial depth, and government consumption expenditure. Moreover, in the short run, we find bidirectional causality between financial depth and economic growth, between financial depth and government consumption expenditure, and between insurance market activities and government consumption expenditure. Unidirectional causality exists from insurance market activities to economic growth, from financial depth to insurance market activities, and from government consumption expenditure to economic growth.

Globalization and insurance activity: Evidence on the industrial and emerging countries

This study applies panel cointegration with cross-country dependence and causality tests to uncover the extent and the magnitude of the relationship between insurance penetration and globalization. The results first confirm evidence of the long-run relationship between insurance market activities and globalization. Second, we find positive impacts of all three globalization indices on life and non-life insurance penetrations, and globalization has a larger impact on insurance market activities in the industrial countries than in the emerging countries. Finally, the results of panel causality tests roughly show bidirectional causality between insurance market activities and globalization in the long run.

Insurance market development and economic growth

Purpose– The purpose of this paper is to examine the causal relationship between insurance penetration and economic growth in eight selected African countries.Design/methodology/approach– The auto-regressive distributed lags bounds approach to cointegration is employed on annual time-series data from 1990 to 2010 to test the causal relationship between insurance and economic growth in Algeria, Gabon, Kenya, Madagascar, Mauritius, Morocco, Nigeria and South Africa. The ratio of life and non-life insurance premiums to gross domestic product are employed as proxies for insurance market development.Findings– The results of the bound test shows a long-run relationship between insurance market activities and economic growth for Kenya, Mauritius, Morocco, Nigeria and South Africa. Causality analysis within the vector error correction model indicates a uni-directional causality from insurance market development to economic growth except for Morocco where there is evidence of a bi-directional causality. Causality within the vector autoregressive framework also provides evidence of a uni-directional causality for Algeria and Madagascar to support the “supply-leading” hypothesis while mixed causality was found for Gabon.Practical implications– This findings provides policy direction for governments and regulatory authorities for developing insurance market in the sample countries.Originality/value– This is the first study to examine the finance-growth relationship from the perspective of insurance markets in a cross-section of African countries.

INSURANCE AND REAL OUTPUT: THE KEY ROLE OF BANKING ACTIVITIES

This paper applies panel cointegration tests and panel vector error correction models for 17 OECD countries and considers cross-sectional dependence and structural breaks to investigate the interrelationship between an insurance market's development and real output, controlling for banking activities. We first obtain evidence of a fairly strong long-run equilibrium relationship among them. Second, we find that insurance market development has positive effects on real output and that banking activities have an unfavorable, if not negative, effect on real output. In fact, insurance market activity is much more productive than banking sector activity. Finally, there exists bidirectional causality between insurance premiums and economic growth in the long run, suggesting the existence of the feedback hypothesis for the insurance–output nexus.

Does Insurance Market Activity Promote Economic Growth? A Cross‐Country Study for Industrialized and Developing Countries

AbstractInsurance market activity may contribute to economic growth, both as financial intermediary and provider of risk transfer and indemnification, by allowing different risks to be managed more efficiently and by mobilizing domestic savings. During the last decade, there has been faster growth in insurance market activity, particularly in emerging markets, given the process of financial liberalization and integration, which raises questions about the overall impact on economic growth. This article tests whether there is a causal relationship between insurance market activity (life and nonlife insurance) and economic growth. Using the generalized method of moments (GMM) for dynamic models of panel data for 55 countries between 1976 and 2004, I find robust evidence for this relationship. Both life and nonlife insurance have a positive and significant causal effect on economic growth. For life insurance, high‐income countries drive the results, and for nonlife insurance, both high‐income and developing countries drive the results.