Existing studies in the past have come to the result that insurance is a luxury good. Often it is those that have wealth to protect that can afford to protect their property. This leads to the assumption that one can differentiate between a 'rich' country and a 'developing' country by the amount of insurance penetration in the industry. Using national wealth statistics, this research undertakes a multiple regression analysis to assess the relationship between non-life insurance penetration and national wealth. The reason for this choice of variable as opposed to income, is that individuals seek to protect ~ their assets thus mitigating the risk of loss or damage of these assets. This means that in order to purchase insurance, there needs to be the presence of wealth that needs protecting. The sample comprises of 45 countries at different stages of economic growth therefore, enabling a distinction to be made between developed and developing nations. The overall result of the study found that national wealth, government consumption and wealth distribution affect demand for non-life insurance products. It was seen that an increase in wealth resulted in an increase in non-life insurance penetration, but at a decreasing rate, therefore showing a wealth elasticity of demand that is less than unity. Government consumption on the other hand, has a negative impact on non-life insurance demand, hence assuming that it is as insurance substitute. For wealth distribution, the result was that there is a positive relationship between wealth inequality and non-life insurance penetration.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:549704 |
| Date | January 2011 |
| Creators | Muraya Jesse, A. |
| Publisher | University of Buckingham |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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