The Relationship between Insurance Market Activity and Economic Growth

Abstract: This research examines the short- and the long-run relationship between insurance market activity and economic growth for a panel data set of 80 countries for the period 2001-2012. Insurance market is investigated as a whole and separately as life and non-life insurance sectors. The countries with different level of economic development are considered. The data is tested for stationarity and unit roots are found. Based on this conclusion cointegration and causality analysis is done. Positive cointegration relationship between the insurance sector and economic growth has been found. In addition, it has been shown that the life insurance is of greater importance to developed countries. Meanwhile, for the developing countries non-life insurance plays a more significant role. The causal relationship in most of considered cases appears to be biderictional in the long-run. In the short-run perspective the results have been found to be less univocal.