Impact of insurance sector activity on economic growth - A meta-analysis

Abstract

RICHTERKOVÁ ZUZANA, KORÁB PETR: Impact of insurance sector activity on economic growth -A metaanalysis. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2013, LXI, No. 7, pp. 2677-2683 The aim of this study is to compute the overall eff ect size concerning the impact of insurance sector activity on economic growth. The connection of insurance activity and economic growth has been a widely investigated topic due to numerous papers and research attempts performed so far. The results, however, o en diff er among individual studies. Therefore a comprehensive analysis of the signifi cance of causality from insurance activity, measured by insurance premium, to business cycle fl uctuation, is well-required. Using 10 published and unpublished studies, we conduct a metaanalysis of the literature on the impact of insurance activity on economic growth. Insurance premium is taken as the measure of insurance activity. The combined signifi cance test of individual t-statistics is employed. The calculation of the eff ect size allows understand the true eff ect relying on synthesis of so far published research with signifi cantly higher amount of observations and better precision. Our results confi rm positive eff ect of insurance activity on economic growth and are particularly important for policy makers who set the policy towards subjects in the insurance market. research synthesis, eff ect size, Random-eff ect model, insurance premiumThe long-standing debate on the impact of insurance market activity on economic growth has been a topic of numerous papers which use diff erent methodologies and diff er in results. Heterogeneity in estimated eff ects and the number of observations provides the ground for synthesis of so far published results and calculation a more precise estimation of the eff ect. In general, insurance market activity, both as the provider of risk transfer and indemnifi cation and as the institutional investor, may contribute to economic growth through mobilisation of domestic savings, allowing diff erent risks to be managed more effi ciently, encouraging the accumulation of new capital, boosting fi nancial stability, facilitating trade and commerce, supporting to reduce or mitigate losses, and fostering a more effi cient allocation of domestic capital (Ward, Zurbruegg, 2000;Kugler, Ofoghi, 2005;Haiss, Sümegi, 2007). Insurance sector activity may be measured by a number of indicators. As the most frequent ones are used insurance premium and indicators involved in insurance premium, (e.g Adams et al., 2009;Arena, 2008;Haiss, Sümegi, 2007;Ward, Zurbruegg, 2000). We therefore use the insurance premium, defi ned as the periodic payment made on an insurance policy, as the indicator for research synthesis.Meta-analysis is a relatively new method fi rstly appearing in 1980s (Havránek, Iršová, 2010a). The recent research using meta-analysis as methodology includes Havránek (2010), trying to uncover the eff ect of currency unions on trade, Havránek, Iršová (2010b), analysing intra-indus...

The relationship between insurance and economic growth: evidence from the European Union countries

“…In this respect, the insurance sector has not received exceptional attention. However, there are a certain number of recent studies (Akinlo & Apanisile, 2014;Ndalu, 2016;Olayungbo & Akinlo, 2016;Richterkova & Korab, 2013;Yinusa & Akinlo, 2013;Zouhaier, 2014) seeking to assess the nexus between insurance and economic growth. Since 1964, the importance of insurance for the economic performance has been fully recognised in the context of the UNCTAD conferences (Cristea et al, 2014).…”

“…To sum up, the researchers have argued that the insurance sector needs to be paid more attention in financial sector analysis and macroeconomic policy as well (Haiss & Sumegi, 2008). Richterkova and Korab (2013) studied the causal relationship of insurance premium on economic growth using 10 published and unpublished studies. The results have confirmed a positive impact of insurance activity on economic growth.…”

Insurance Sector Development and Economic Growth in Nigeria, 1980 –2014

“…The relationship between per capita income levels and insurance penetration is also strong in the reverse direction-with rising income a strong driver of life insurance coverage. However, it is difficult to disentangle whether lower insurance consumption at lower income levels reflects reduced demand for life insurance products or constraints on the supply side associated with weak regulatory and supervisory environments and high costs of insurance provision (Richterkova & Korab, 2013). Of course, even if the data did not support a strong causal role for insurance as an engine of overall aggregate growth, there might be a strong case for insuring the poor on social welfare grounds that those at or below the poverty line are particularly vulnerable to catastrophic shocks to income and consumption.…”

Investment Activity of Insurers and the State Economic Growth

“…Z. Richterkova and P. Korab, (2013) carried out a combined assessment of the significance of certain statistics of the insurance sector on economic growth. As a measure of insurance activity, the volume of insurance premiums is used.…”