The Determinants of Life Insurance Demand in Central and Southeastern Europe

Abstract

<p>The main purpose of this study is to identify determinants of the demand of life insurance in 14 countries in Central and South- Eastern Europe (CSEE). We use fixed-effects panel model for the period 1998 - 2010 allowing each cross-sectional unit to have a different intercept term serving as an unobserved random variable that is potentially correlated with the observed regressors. We use two measures as a demand for life insurance: life insurance penetration and life insurance density. The research results show that higher, GDP per capita, inflation, health expenditure, level of education and rule of law are the most robust predictors of the use of life insurance. Real interest rates, ratio of quasi-money, young dependency ratio, old dependency ratio control of corruption and government effectiveness do not appear to be robustly associated with life insurance demand.</p

The nexus between the demand for life insurance and institutional factors in Europe: new evidence from a panel data approach

“…The negative correlation is explained through the argument that this type of public expenditure is financed through increased taxation, which reduces the disposable income to be invested in life insurance policies (Beenstock et al, 1986;Li et al, 2007). The positive relationship, identified by Kjosevski (2012) and Alhassan and Biekpe (2016) supports the 'complementarity' hypothesis of social insurance programmes with private insurance consumption.…”

“…growth rate and business freedom having a negative impact. For the transition economies from Central and South-Eastern Europe, Kjosevski (2012) also proves that G.D.P. per capita and inflation are economic determinants of life insurance demand.…”

Impact of Economic Factors on Life Insurance Development in Western Balkan Countries

“…They carried out the research on 30 OECD countries in the period between 1993 and 2000. Kjosevski (2012) analyzed the determinants of life insurance demand in panel of 14 countries in Central and South-Eastern Europe over the period 1998 -2010, using two indicators of life insurance demand, life insurance penetration and life insurance density. He found that life insurance penetration and life insurance density increase with higher per-capita income.…”

Factors Influencing Life Insurance Market Development in Montenegro

“…Treerattanapun (2011) emphasizes that high education is not a guarantee for a person to understand the complexity of life insurance as a product because insurance is not necessarily studied at all universities in detail. Kjosevski (2012) while analysing the determinants of life insurance demand in Central and South Eastern Europe, found that higher level of education leaded to a higher life insurance penetration and higher life insurance density. This finding suggests a need for elevating the education level of population, because it would be useful to enhance the understanding of financial products presented on the market and possible benefits from using them by potential consumers.…”