The determinants of non-life insurance penetration in selected countries from South Eastern Europe

Abstract

This study examines the determinants of non-life insurance penetration in 8 countries from South Eastern Europe (SEE), during the period 1995–2011, applying a panel vector error correction model (PVECM). This model will help us to identify the most important determinants of non-life insurance penetration in selected SEE countries. As a measure for non-life insurance demand we used non-life insurance penetration. Empirical results provided the evidence that the number of passenger cars per 1,000 people, GDP per capita and rule of law positively and significantly influence the non-life insurance penetration. The results also indicate that when the non-life insurance penetration deviates from its long-run equilibrium the speed of adjustment will subsequently bring it back to the equilibrium level, which in our case will take almost 1 year.