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Economic and Social Determinants of Life Insurance Consumption – Evidence from Central and Eastern Europe

Variance in life insurance consumption across countries raises the question on its determinants. This paper analyzes economic and social factors affecting the life insurance consumption in fast growing insurance market of Central and Eastern Europe. The analysis is based on the sample of 11 Central and Eastern European countries over the period 1995–2008. Our findings obtained by dynamic panel analysis are consistent with results of previous empirical studies done for developed markets and those that encompass both developed and undeveloped ones. Regarding economic variables level of economic development positively impacts life insurance consumption while higher inflation and real interest rates reduce it. Among the social determinants the most important determinants are life expectancy and young dependency ratio. Both of them positively contribute to life insurance demand. Social security system has also statistical significant impact on life insurance demand in Central and Eastern European market.

life insurance consumption; economic and social determinants; dynamic panel analysis

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