Life insurance demand: Middle East and North Africa

Purpose Life insurance is a kind of long-term investment; hence, the purpose of buying life insurance is to cover both current and future damages for the insured. Although insurance plays a crucial rule in fiscal and economic development, in MENA countries, insurance, especially life insurance, remains undeveloped, with a low penetration rate. Therefore, the purpose of this paper is to determine the factors that affect life insurance demand. Design/methodology/approach To analyze the determinants of life insurance demand during 2004-2012, a panel data model was estimated with Eviews software. Data on population, gross domestic product (GDP), interest rate, inflation rate, and human development index are extracted from the World Bank, and data on life insurance premium are gathered from Sigma International reports. Findings Results show that the price elasticity of life insurance demand is −0.77, the elasticity of life insurance subject to HDI is 1.68, the elasticity of life insurance subject to GDP is 0.92, and the elasticity of life insurance subject to interest rate is −0.33. The demand for life insurance has a positive significant relationship with population size. Research limitations/implications The low elasticity of life insurance demand subject to GDP, interest rate, and inflation rate shows that the life insurance penetration rate in MENA countries is due to the dominance of compulsory insurance, and not due to voluntary purchasing of life insurance. The higher effect of HDI on the life insurance demand illustrates that, for developing the life insurance market, it is first necessary to improve the standard of life, education status, and the economic base. Originality/value As in the MENA region life insurance has remained undeveloped and there are no related studies in this area, it can be hypothesized that the life insurance penetration rate in MENA is due to the dominance of compulsory insurance and not due to voluntary purchasing of life insurance. The higher effect of HDI on life insurance demand illustrates that, for developing the life insurance market, it is first necessary to improve the standard of life, education status, and economic base.

Download Full-text

Gender perspective on life insurance demand in Ghana

International Journal of Social Economics ◽

10.1108/ijse-03-2017-0120 ◽

2018 ◽

Vol 45 (12) ◽

pp. 1631-1646

Author(s):

Samuel Ampaw ◽

Edward Nketiah-Amponsah ◽

Nkechi Srodah Owoo

Keyword(s):

Life Insurance ◽

Wald Test ◽

Insurance Demand ◽

Cross Sectional ◽

Male And Female ◽

Content Type ◽

Insurance Policies ◽

Life Insurance Demand ◽

Northern Regions ◽

Household Heads

Purpose Against the background that Ghanaians seldom purchase insurance policies, the purpose of this paper is to investigate the determinants of life insurance uptake among male and female household heads in Ghana. Design/methodology/approach The study employs data on 775 male and 233 female household heads from the sixth round of the Ghana Living Standards Survey. Adjusted Wald test statistics and logistic regressions are employed for the empirical estimations. Findings Results from the adjusted Wald test show that the sampled male household heads significantly differ from their female counterparts in terms of the selected socioeconomic and demographic characteristics. Though ill health status, higher wealth, being self-employed or in wage or salaried employment and residing in either of the three northern regions (upper east, upper west and northern regions) in Ghana broadly affect the demand for life insurance among both male and female heads, other factors are peculiar to either parties. Particularly, whereas female heads who are married and those with more dependants have a higher propensity of purchasing life insurance policies, their male counterparts with higher education are more likely to buy life insurance policies. Research limitations/implications The paper adds to the paucity of cross-sectional studies on life insurance demand in Africa. Practical implications Based on the explored determinants, insurers could better regulate the purchase of their products by taking into consideration the gender differences to maximize their sales and enhance economic growth and development. Originality/value This paper explores the gender dynamics in the determinants of life insurance demand in a developing country, Ghana. Besides, findings from related literature are reported to be mixed. Though the current paper is not wholly nationally representative, it utilizes data from across all the ten administrative regions of Ghana. To the best of the authors’ knowledge, no prior study has been conducted in this manner.

Download Full-text

Determinant of life insurance demand in Ethiopia

Journal of Economics Business and Accountancy Ventura ◽

10.14414/jebav.v21i3.1474 ◽

2019 ◽

Vol 21 (3) ◽

pp. 293

Author(s):

Mohammed Meko ◽

Kenenisa Lemie ◽

Abel Worku

Keyword(s):

Interest Rate ◽

Life Insurance ◽

Real Interest Rate ◽

Insurance Companies ◽

Regression Result ◽

Dependency Ratio ◽

Age Dependency ◽

Insurance Demand ◽

Life Insurance Demand ◽

Age Dependency Ratio

Life Insurance plays an important role to insure against lifetime uncertainty resulting for the mortality risk of individual. Even though the performance of insurance industry contributes to smooth operation of the nation’s economy, the industry in general and life insurance in particular is at its low level of development in Ethiopian context. This study therefore, is aimed at investigating the determinants of life insurance demand in Ethiopia. The study used balanced panel data model to examine the determinants of life insurance demand usingdata collected from four insurance companies for sixteen years, from 2001-2016. Random effect model was usedto analyze the data using STATA version 13 software. The study used life insurance density as dependent variable and seven independent variables that are income, inflation, real interest rate, life expectance, age dependence ratio, price of insurance and urbanization. The regression result show that real interest rate, life expectancies, age dependency ratio, urbanization and inflation show positive and significant effect at 1% and 5% significance level on life insurance demand in Ethiopia, whereas GDP per capita and price of insurance has insignificant effect on life insurance demand in Ethiopia.Urbanization is the most important factor that influences demand for life insurance followed by life expectance, age dependency ratio and Inflation. Real interest rate is the least important factor in influence demand for life insurance. The concerned insurance companies are recommended to consider these factors in marketing their life insurance products.

Download Full-text

Investor confidence and life insurance demand: can economic condition limit life insurance business?

International Journal of Emerging Markets ◽

10.1108/ijoem-06-2020-0650 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Danish Ahmed ◽

Yuantao Xie ◽

Khelfaoui Issam

Keyword(s):

Life Insurance ◽

Sovereign Debt ◽

Economic Condition ◽

Market Condition ◽

Insurance Demand ◽

Policy Makers ◽

Content Type ◽

Investor Confidence ◽

Confidence Levels ◽

Life Insurance Demand

PurposeLife insurance is bought with a prior belief that promise stipulated in policy will be honored when due. Discernibly, this belief is backed by the confidence that financial markets and economy will demonstrate satisfactory performance. However, individuals' confidence levels may get shaken through naïve reinforcement learning if they witness negative market or economic condition. Considering this the authors investigate the relationship between investor confidence and life insurance demand.Design/methodology/approachThe authors used bias corrected bootstrapped sample of OECD economies to examine the link between investor confidence and life insurance demand when two possible economic conditions were witnessed: 1) normal/economic expansion and 2) economic/debt impairment. The findings are robust to alternate estimation techniques and endogeneity.FindingsThe authors found that lower investor confidence, sovereign debt impairment and negative market condition will have negative repercussion on life insurance demand. On the other hand, investor confidence-life insurance demand nexus is merely influenced by market and economic condition.Originality/valueThis is a premier research explaining the nexus between investor confidence and life insurance demand in the context of life-cycle hypothesis, sovereign ratings channel and experience-confidence-belief framework. The finding will help economic policy-makers in developing pre-emptive measures to protect life insurance businesses from negative repercussions of lower confidence and negative market conditions.

Download Full-text