Demand Determiants of Insurance in India
DETERMINANTS OF LIFE INSURANCE DEMAND
In Selected 12 Asian Economies
Subir Sen[1] and S Madheswaran[2]
Institute for Social and Economic Change
Nagrabhavi (PO)
Bangalore 560072
Email: sens@isec.ac.in
Abstract
The growth of the services sector in the Asian economies, led to substantial changes in the financial sector. The Asian Financial Crisis, affecting the ASEAN economies in particular resorted to more regulatory measures to enhance delivery of products with minimal risks and failures. The countries surrounding the ASEAN economies also went through a phase of economic-restructuring and the most notable event being the impact of China’s accession to WTO. The insurance industry, in most of the Asian economies were publicly owned and operated. Government monopoly kept this segment of the financial market isolated from domestic private or foreign participation. Barring few exceptions, the insurance market on an average remained underdeveloped in terms of insurance density and penetration. Although the regions’ insurance industry was not so badly affected by the financial crisis, but reforms started after 1990s. Regulatory changes allowing private and foreign entry has been luring global heavyweight insurance companies to enter these economies. As more and more suppliers enter these markets, the important issue is to examine the factors that enhance demand for insurance products. This study based on 4 SAARC countries, 2 countries from Greater China Region and 6 ASEAN Countries, deals with this particular issue. After reviewing existing theoretical as well as empirical literature, we find that determinants can be grouped as economic, demographic, legal, socio-political, etc. variables. We restrict our selves in identifying only variables falling under the first two groups. Above all, considering the luxury good characteristics of life insurance, we do not consider variable like population growth, income, etc. which intuitively raises demand. Annual data
In Selected 12 Asian Economies
Subir Sen[1] and S Madheswaran[2]
Institute for Social and Economic Change
Nagrabhavi (PO)
Bangalore 560072
Email: sens@isec.ac.in
Abstract
The growth of the services sector in the Asian economies, led to substantial changes in the financial sector. The Asian Financial Crisis, affecting the ASEAN economies in particular resorted to more regulatory measures to enhance delivery of products with minimal risks and failures. The countries surrounding the ASEAN economies also went through a phase of economic-restructuring and the most notable event being the impact of China’s accession to WTO. The insurance industry, in most of the Asian economies were publicly owned and operated. Government monopoly kept this segment of the financial market isolated from domestic private or foreign participation. Barring few exceptions, the insurance market on an average remained underdeveloped in terms of insurance density and penetration. Although the regions’ insurance industry was not so badly affected by the financial crisis, but reforms started after 1990s. Regulatory changes allowing private and foreign entry has been luring global heavyweight insurance companies to enter these economies. As more and more suppliers enter these markets, the important issue is to examine the factors that enhance demand for insurance products. This study based on 4 SAARC countries, 2 countries from Greater China Region and 6 ASEAN Countries, deals with this particular issue. After reviewing existing theoretical as well as empirical literature, we find that determinants can be grouped as economic, demographic, legal, socio-political, etc. variables. We restrict our selves in identifying only variables falling under the first two groups. Above all, considering the luxury good characteristics of life insurance, we do not consider variable like population growth, income, etc. which intuitively raises demand. Annual data
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