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Determinants of life insurance consumption across countries, Volume 1
 
Author:Beck, Thorsten; Webb, Ian; Collection Title:Policy, Research working paper series ; no. WPS 2792
Date Stored:2002/03/15Document Date:2002/02/28
Document Type:Policy Research Working PaperLanguage:English
Major Sector:FinanceReport Number:WPS2792
Sub Sectors:Other FinanceSubTopics:Environmental Economics & Policies; Non Bank Financial Institutions; Payment Systems & Infrastructure; Contractual Savings; Health Economics & Finance; Insurance & Risk Mitigation
Volume No:1  

Summary: The importance of life insurance companies as part of the financial sector has significantly increased over the past decades, both as provider of important financial services to consumers and as a major investor in the capital market. However, the authors still observe a large variance in life insurance consumption across countries, which raises the question of its determinants. The authors use a greatly expanded data set on life insurance consumption to examine the determinants of the demand and supply of life insurance products across countries and over time. Using a cross-sectional sample of 63 countries averaged over 1980-96, the authors find that educational attainment, banking sector development, and inflation are the most robust predictors of life insurance consumption, while income is only a weak predictor. The results on educational attainment and inflation are confirmed in a panel of 23 countries over the period 1960-96. The results strengthen the case for promoting price stability, financial sector reform, and an efficient education system if life insurance and its many benefits are to be fully realized in an economy.

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