A Cross-country Analysis of the Determinants of Insurance Supply and Demand

Khairudin Damhoeri

Abstract


ABSTRACT

Past studies in international insurance have not adequately addressed the importance of the relationship between the forces of supply and demand and assumed away any relationship between life and non-life insurance towards gaining a better understanding of this still under-researched area, a two-insurance market model is developed. In the empirical estimation of the model, the technique of three stage least square is employed. The empirical findings suggest that life and non-life insurance are complements. both in the demand and supply sides. A number of variables from the broad c1asses of economic, sociopolitical and regulatory variables were found to be significant in determining insurance supply and demand. Of specific variables different than those found in previous studies, the lack of civil liberty was found to negatively affect non-life insurance demand while a mandatory reinsurance cession requirement negatively affects non-life insurance supply

ABSTRAK

Kajian lepas dalam bidang insurans antarabangsa masih belum lagi mengambil kira secukupnya kepentingan perhuhungan kuasa penawaran dan permintaan, dan telah mengandaikan bahawa hubungan tidak wujud antara insurans hayat dan insurans am. Untuk memahami bidang insurans yang masih belum diterokai sepenuhnya ini, satu model teoritikal pasaran dua insurans telah dibentuk. Dalam anggaran empirikal model ini, teknik ganda dua terkecil tiga peringkat telah digunakan. Penemuan empirik menunjukkan insurans hayat dan insurans am adalah barang penggenap baik dari segi permintaan mahupun penawaran. Beberapa variabel dari kelas am ekonomi, sosio-politik dan kawalan telah didapastikan mempengaruhi tawaran dan permintaan. Daripada beberapa variabel yang berlainan daripada yang ditemui oleh kajian-kajian sebelum ini, variabel ketiadaan kebebasan sivil didapati mempunyai kesan negatif terhadap permintaan insurans am, manakala variabel insurans semula mandatori didapati mempunyai kesan negatif terhadap penawaran insurans am.


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