The determinants of non-life insurance consumption: A VECM analysis in Central and South-Eastern Europe

Abstract

J. KJOSEVSKI -M. PETKOVSKIThis study examines the determinant of non-life insurance consumption in 14 countries of Central and South-Eastern Europe between 1995 and 2010 within a vector error correction model (VECM). We use non-life insurance penetration as a measure for non-life insurance consumption. Empirical results provide evidence that the number of dwellings and number of passenger cars positively and signifi cantly infl uence non-life insurance consumption in the long run, while the existence of the rule of law and EU membership are signifi cant in the short run.

Influence of Macroeconomics Factors and Legal Stability to the Insurance Growth in the ASEAN-5 Countries

“…The third variable, trade shows positive relationship with non-life insurance development at 1% significant level. It suggests that the developing countries in ASEAN are relying on trade activity that heavily depends on marine and cargo industries, hence the consumption on non-life insurance to safeguard these assets is also high (Kjosevski & Petkovski 2015). Moreover, this might propose that the current hot topic on investment opportunities presented by China's One Belt One Road program which are very much related to the trade activities, could stimulate more on non-life insurance development in the future.…”

“…Non-life or also known as general insurance focused on obligatory types of insurance such as motor and fire insurance; non-compulsory coverage such as theft, marine, aviation, travel and bond insurance. On the other hand, life insurance protect the beneficiaries upon a certain accidents such as medical insurance (Kjosevski & Petkovski 2015;Millo & Carmeci 2011). According to Borscheid and Haueter (2015), modern insurance is a European discovery and a response to the speedy growth in risk that resulted from the development of trade and the expansions of industrialization.…”

“…This study fills up the gap in existing literature on three main aspects. First, unlike most of the studies that examine the issues of non-life insurance development in developed Europe countries (see : Dragos 2014;Kjosevski & Petkovski 2015;Njegomir et al 2012), this studies focus on non-life insurance development in developing countries. This is because there are still plenty of room for the non-life insurance industry in these countries to grow better.…”

“…Past researchers such as Fang et al (2014), Petkovski et al (2014), Olgić Draženović andKusanović (2016) and Dragos et al (2017) recommend that effective legal systems and strong protections enhance financial market expansion through better enforcement mechanisms. An immense deal of attention has been focused to the development of banking industry but a scant attention has been paid to insurance, which is classified as the third keystone of the financial services sector (Pan et al 2016;Kjosevski & Petkovski 2015).…”

Impact of Economic Factors on Life and Non- Life Insurance Development in Albania – A VECM Analysis

“…The empirical studies conducted from a macroeconomic perspective are focused on identifying the factors that affect the consumption and development of life and non-life insurance based on cross-sections or panel/single country data [6,35,72]. Variables that affect consumption for life and non-life insurance identified in numerous studies can be classified into economic, institutional, demographic, socio-cultural and psychological ones [6,12,16,19,34,35,56,68,73]. In addition, there are studies that address the way how consumers benefit from solvency regulations [26].…”