Research Article
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In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe

Year 2018, Volume: 18 Issue: 2, 179 - 194, 01.04.2018
https://doi.org/10.21121/eab.2018237349

Abstract

In this study, it is analyzed the income based

determinants of premiums that produced by

insurance companies in developed and emerging

economies from the European case. Within the

framework of the debt crisis in Europe, it has also

been investigated how premium production

of insurance companies is affected by crises in

countries where wealth and insurance awareness

are high. The analyzes were performed using

system dynamic panel data models and data from

32 countries. Findings indicate that premium

production of insurance companies is affected by

income-based determinants such as per capita

purchasing power and per capita savings. The

variables such as output gap and unemployment

that indicating volume of the economic activity

have also an impact on the insurance premiums.

In addition, it was determined that the serious

crises that took place behind one after another also

reduced premium production.

References

  • Alhassan, A. L., ve Biekpe, N. (2016) “Determinants of Life Insurance Consumption in Africa”, Research in International Business and Finance, 37: 17-27.
  • Anderson T., ve Hsiao, C. (1981) “Estimation of Dynamic Models with Error Components”, Journal of American Statistical Association, 76(375): 598-606.
  • Arellano, M. (2005) Panel Data Econometrics: Advanced Texts in Econometrics, Oxford University Press. Arellano, M ve Bond, S. (1991) “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Unemployment Equations”, Review of Economic Studies, 58: 277-297.
  • Arellano, M. ve Bover, O. (1995) “Another Look at the Instrumental Variable Estimation of Error-Components Models”, Journal of Econometrics, 68(1): 29-51. Bagus, P. (2011) “The Eurosystem: Costs and Tragedies”, Institution in Crisis: European Perspectives on Recession içinde, Ed. D. Howen, Cheltehham, UK: Edward Elgar Publishing, 117-141.
  • Beck, T., ve Webb, I.. (2002) “Determinants of Life Insurance Consumption across Countries”, World Bank Policy Research Working Papers, March.
  • Benson, E. D. ve Marks, B. D. (2011) “Determinants of Private Sector Insurance Premiums on Municipal Debt Insurance”, Municipal Finance Journal, 32(3), 1-18.
  • Bijlsma, M. ve Vermeulen, R.. (2015) “Insurance Companies' Trading Behaviour during the European Sovereign Debt Crisis: Flight Home or Flight to Quality?” DeNederlandscheBank Working Papers, No. 468, March.
  • Blundell, R. ve Bond, S. (1998) “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models”, Journal of Econometrics, 87(1): 115-143.
  • Brender, A., Pisani, F. ve Gagna, E. (2012). The Sovereign Debt Crisis: Placing A Curb on Growth, Centre for European Policy Studies, Brussels.
  • Choi, I. (2001), “Unit Root Tests for Panel Data”, Journal of International Money and Finance, 20: 249–272.
  • Curak, M., Dzaja, I., ve Pepur, S.. (2013) “The Effect of Social and Demographic Factors on Life Insurance Demand in Croatia”, International Journal of Business and Social Science, 4(9), 65-72.
  • Cusack, J. (2012). “Eurozone Exposure – The Debt Crisis Impact on (Re)Insurers”, Aspen Opinion, 07 February.
  • Düll, R., König, F. ve Ohls, J. (2015). “On the Exposure of Insurance Companies to Sovereign Risk – Portfolio Investments and Market Forces”, Deutsche Bundesbank, Discussion Papers, No. 34/2015.
  • Enroljas, G. ve Sentis, P. (2008) “The Main Determinants of Insurance Purchase: An Empirical Study on Crop Insurance Policies in France”, Lameta Research Papers, No. DR2008-06.
  • ESRB. (2015) “Report on Systemic Risk in the EU Insurance Sector”, European Systemic Risk Board, European System of Financial Supervision, December.
  • Gius, Mark P. (1998) “Using Panel Data to Estimate the Determinants of Medical Malpractice Insurance Premiums”, Applied Economic Letters, 5(1): 37-39.
  • Gius, M. P. (2010) “An Analysis of the Health Insurance Coverage of Young Adults”, International Journal of Applied Economics, 7(1): 1-17.
  • Guerineau, S. ve Sawadogo, R.. (2015) “On the Determinants of Life Insurance Development in Sub- Saharan Africa: The Role of the Institutions Quality in the Effect of Economic Development”, HAL Archives Papers, No. 001178838, July.
  • Hammond, J.D., Houston, David B., ve Melander, Eugene R. (1967) “Determinants of Household Life Insurance Premium Expenditures: An Empirical Investigation”, Journal of Risk an Insurance, 34(3): 397-408.
  • Holtz-Eakin, D., Newey, W., ve Rosen, H.S. (1988) “Estimating Vector Autoregressions with Panel Data”, Econometrica, 56(6): 1371-1395.
  • Hussels, S., Ward, D., ve Zurbruegg, R.. (2005) “Stimulating the Demand for Insurance”, Risk Management and Insurance Review, 8(2): 257-278.
  • Hwang, T, ve Gao, S. (2003) “The Determinants of the Demand for Life Insurance in an Emerging Economy – The Case of China”, Managerial Finance, 29(5-6): 82 – 96. Ibok, N. I. (2012) “Socio-Economic and Demographic Determinants of Health Insurance Consumption”, Canadian Social Science, 8(5): 58-64.
  • Ibiwoye, A., Ideji, J. O. ve Oke, B. O. (2010) “The Determinants of Life Insurance Consumption in Nigeria: A Cointegration Approach”, International Journal of Academic Research, 2(4): 351-358.
  • Im, K.S., Pesaran, M.H. and Shin, S. (2003), “Testing for Unit Roots in Heterogeneous Panels”, Journal of Econometrics, 115(1): 53-74.
  • IMF. (2016) “The Insurance Sector – Trends and Systemic Risk Implications”, Global Financial Stability Report: Potent Policies for A Successful Normalization, IMF, April. Impawido, G. ve Tower, I.. (2009) “How The Financial Crisis Affects Pensions and Insurance and Why The Impacts Matter”, IMF Working Papers, No. WP/09/151, July.
  • Jakovcevic, D. ve Zaja, M. M. (2014) “Underwriting Risks as Determinants of Insurance Cycles: Case of Croatia”, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 8(5): 1251-1258.
  • Kjosevski, J. (2012) “The Determinants of Life Insurance Demand in Central and Southeastern Europe”, International Journal of Economics and Finance, 4(3): 237-247.
  • Klein, R. W., Ma, G., Ulm, E. R., Wang, S., Wei, X., ve Zanjani, G.. (2009) The Financial Crisis and Lessons for Insurers, Socaity of Actuaries.
  • Kocovic, J., Antic, T. R., ve Jovovic, M. (2011) “The Impact of The Global Financial Crisis on The Structure of Investment Portfolios of Insurance Companies”, Economic Anals, 56(191): 143-161.
  • Lee, S.-J., Kwon, S.-I., ve Chung, S. Y. (2010) “Determinants of Household Demand for Insurance: The Case of Korea”, The Geneva Papers, 35: S82-S91.
  • Levin, A., Lin C. ve Chu, C.J. (2002), “Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties”, Journal of Econometrics, 108(1): 1-24.
  • Liedtke, P. M., ve Schanz, K.U. (2010) “The Global Financial Crisis and the Insurance Industry Frequently Asked Questions”, SC9 Insurance and Finance, The Geneva Association.
  • Luciano, E., Outreville, F., ve Rossi, M. (2015) “Life Insurance Demand: Evidence from Italian Households, A Microeconomic View and Gender Issues”, Nestpar Discussion Papers, No. DP05/2015-010.
  • Malafronte, I., Porzio, C. ve Starita, M. G. (2014) “Disclosure Practices and Financial Crisis: Empirical Evidences in the European Insurance Industry”, SSRN Paper, No. 2374688, June 4.
  • Moldogaziev, T. T. Ve Johnson, C. L. (2011) “The Determinants of Bonds Insurance Premium”, Indiana University School of Public and Environmental Affairs, Reseach Papers, No. 2011-03-06.
  • Needleman, P., Rastogi, R., and Murray, C. (2012) “Managing Insurers Through the Eurozone Crisis: An Unfolding Story”, Emphasis, No. 1: 2-7.
  • Reinhart, C.M. ve Rogoff, K.S. (2013) “Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten”, IMF Working Papers, No. WP/13/266, December.
  • Roodman, D. (2006). “How to Do xtabond2: An Introduction to “Difference” and “System” GMM in Stata”, Center for Global Development Working Papers, No:103, December.
  • Roodman, D. (2008). “A Note on the Theme of Too Many Instruments”, Center for Global Development Working Papers, No: 125, May.
  • Sarkodie, E. E. ve Yusif, H. M. (2015) “Determinants of Life Insurance Demand, Consumer Perspective – A Case Study of Ayeduase-Kumasi Community, Ghana”, Business and Economics Journal, 6(3): 1-4.
  • Schich, S. (2009) “Insurance Companies and the Financial Crisis”, OECD Financial Market Trends, No. 2009/2, October: 1-31.
  • Schich, S. (2010) “The Role of Insurance in the Recent Financial Crisis”, Insurance Markets and Companies: Analyses and Actuarial Computations, 1(1): 45-53.
  • Tamura, K. ve Tabakis, E. (2013) “The Use of Credit Claims as Colleteral for Eurosystem Credit Operations”, European Central Bank Occasional Paper Series, No. 148, June.
  • Tatoğlu, F. Y. (2013) İleri Panel Veri Analizi: Stata Uygulamalı, 2. Baskı, İstanbul: Beta Yayınevi. Willie, M.M. (2015) “An Analysis of the Healthcare Premium Determinants Using Mixed Models”, Health Systems and Policy Research, 2(1-3): 1-8.
  • Wilson, T.C. (2013) “Risk Management in the Face of Risky Sovereign Debt: Four Observations”, BIS Papers, No. 72.
Year 2018, Volume: 18 Issue: 2, 179 - 194, 01.04.2018
https://doi.org/10.21121/eab.2018237349

Abstract

References

  • Alhassan, A. L., ve Biekpe, N. (2016) “Determinants of Life Insurance Consumption in Africa”, Research in International Business and Finance, 37: 17-27.
  • Anderson T., ve Hsiao, C. (1981) “Estimation of Dynamic Models with Error Components”, Journal of American Statistical Association, 76(375): 598-606.
  • Arellano, M. (2005) Panel Data Econometrics: Advanced Texts in Econometrics, Oxford University Press. Arellano, M ve Bond, S. (1991) “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Unemployment Equations”, Review of Economic Studies, 58: 277-297.
  • Arellano, M. ve Bover, O. (1995) “Another Look at the Instrumental Variable Estimation of Error-Components Models”, Journal of Econometrics, 68(1): 29-51. Bagus, P. (2011) “The Eurosystem: Costs and Tragedies”, Institution in Crisis: European Perspectives on Recession içinde, Ed. D. Howen, Cheltehham, UK: Edward Elgar Publishing, 117-141.
  • Beck, T., ve Webb, I.. (2002) “Determinants of Life Insurance Consumption across Countries”, World Bank Policy Research Working Papers, March.
  • Benson, E. D. ve Marks, B. D. (2011) “Determinants of Private Sector Insurance Premiums on Municipal Debt Insurance”, Municipal Finance Journal, 32(3), 1-18.
  • Bijlsma, M. ve Vermeulen, R.. (2015) “Insurance Companies' Trading Behaviour during the European Sovereign Debt Crisis: Flight Home or Flight to Quality?” DeNederlandscheBank Working Papers, No. 468, March.
  • Blundell, R. ve Bond, S. (1998) “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models”, Journal of Econometrics, 87(1): 115-143.
  • Brender, A., Pisani, F. ve Gagna, E. (2012). The Sovereign Debt Crisis: Placing A Curb on Growth, Centre for European Policy Studies, Brussels.
  • Choi, I. (2001), “Unit Root Tests for Panel Data”, Journal of International Money and Finance, 20: 249–272.
  • Curak, M., Dzaja, I., ve Pepur, S.. (2013) “The Effect of Social and Demographic Factors on Life Insurance Demand in Croatia”, International Journal of Business and Social Science, 4(9), 65-72.
  • Cusack, J. (2012). “Eurozone Exposure – The Debt Crisis Impact on (Re)Insurers”, Aspen Opinion, 07 February.
  • Düll, R., König, F. ve Ohls, J. (2015). “On the Exposure of Insurance Companies to Sovereign Risk – Portfolio Investments and Market Forces”, Deutsche Bundesbank, Discussion Papers, No. 34/2015.
  • Enroljas, G. ve Sentis, P. (2008) “The Main Determinants of Insurance Purchase: An Empirical Study on Crop Insurance Policies in France”, Lameta Research Papers, No. DR2008-06.
  • ESRB. (2015) “Report on Systemic Risk in the EU Insurance Sector”, European Systemic Risk Board, European System of Financial Supervision, December.
  • Gius, Mark P. (1998) “Using Panel Data to Estimate the Determinants of Medical Malpractice Insurance Premiums”, Applied Economic Letters, 5(1): 37-39.
  • Gius, M. P. (2010) “An Analysis of the Health Insurance Coverage of Young Adults”, International Journal of Applied Economics, 7(1): 1-17.
  • Guerineau, S. ve Sawadogo, R.. (2015) “On the Determinants of Life Insurance Development in Sub- Saharan Africa: The Role of the Institutions Quality in the Effect of Economic Development”, HAL Archives Papers, No. 001178838, July.
  • Hammond, J.D., Houston, David B., ve Melander, Eugene R. (1967) “Determinants of Household Life Insurance Premium Expenditures: An Empirical Investigation”, Journal of Risk an Insurance, 34(3): 397-408.
  • Holtz-Eakin, D., Newey, W., ve Rosen, H.S. (1988) “Estimating Vector Autoregressions with Panel Data”, Econometrica, 56(6): 1371-1395.
  • Hussels, S., Ward, D., ve Zurbruegg, R.. (2005) “Stimulating the Demand for Insurance”, Risk Management and Insurance Review, 8(2): 257-278.
  • Hwang, T, ve Gao, S. (2003) “The Determinants of the Demand for Life Insurance in an Emerging Economy – The Case of China”, Managerial Finance, 29(5-6): 82 – 96. Ibok, N. I. (2012) “Socio-Economic and Demographic Determinants of Health Insurance Consumption”, Canadian Social Science, 8(5): 58-64.
  • Ibiwoye, A., Ideji, J. O. ve Oke, B. O. (2010) “The Determinants of Life Insurance Consumption in Nigeria: A Cointegration Approach”, International Journal of Academic Research, 2(4): 351-358.
  • Im, K.S., Pesaran, M.H. and Shin, S. (2003), “Testing for Unit Roots in Heterogeneous Panels”, Journal of Econometrics, 115(1): 53-74.
  • IMF. (2016) “The Insurance Sector – Trends and Systemic Risk Implications”, Global Financial Stability Report: Potent Policies for A Successful Normalization, IMF, April. Impawido, G. ve Tower, I.. (2009) “How The Financial Crisis Affects Pensions and Insurance and Why The Impacts Matter”, IMF Working Papers, No. WP/09/151, July.
  • Jakovcevic, D. ve Zaja, M. M. (2014) “Underwriting Risks as Determinants of Insurance Cycles: Case of Croatia”, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 8(5): 1251-1258.
  • Kjosevski, J. (2012) “The Determinants of Life Insurance Demand in Central and Southeastern Europe”, International Journal of Economics and Finance, 4(3): 237-247.
  • Klein, R. W., Ma, G., Ulm, E. R., Wang, S., Wei, X., ve Zanjani, G.. (2009) The Financial Crisis and Lessons for Insurers, Socaity of Actuaries.
  • Kocovic, J., Antic, T. R., ve Jovovic, M. (2011) “The Impact of The Global Financial Crisis on The Structure of Investment Portfolios of Insurance Companies”, Economic Anals, 56(191): 143-161.
  • Lee, S.-J., Kwon, S.-I., ve Chung, S. Y. (2010) “Determinants of Household Demand for Insurance: The Case of Korea”, The Geneva Papers, 35: S82-S91.
  • Levin, A., Lin C. ve Chu, C.J. (2002), “Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties”, Journal of Econometrics, 108(1): 1-24.
  • Liedtke, P. M., ve Schanz, K.U. (2010) “The Global Financial Crisis and the Insurance Industry Frequently Asked Questions”, SC9 Insurance and Finance, The Geneva Association.
  • Luciano, E., Outreville, F., ve Rossi, M. (2015) “Life Insurance Demand: Evidence from Italian Households, A Microeconomic View and Gender Issues”, Nestpar Discussion Papers, No. DP05/2015-010.
  • Malafronte, I., Porzio, C. ve Starita, M. G. (2014) “Disclosure Practices and Financial Crisis: Empirical Evidences in the European Insurance Industry”, SSRN Paper, No. 2374688, June 4.
  • Moldogaziev, T. T. Ve Johnson, C. L. (2011) “The Determinants of Bonds Insurance Premium”, Indiana University School of Public and Environmental Affairs, Reseach Papers, No. 2011-03-06.
  • Needleman, P., Rastogi, R., and Murray, C. (2012) “Managing Insurers Through the Eurozone Crisis: An Unfolding Story”, Emphasis, No. 1: 2-7.
  • Reinhart, C.M. ve Rogoff, K.S. (2013) “Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten”, IMF Working Papers, No. WP/13/266, December.
  • Roodman, D. (2006). “How to Do xtabond2: An Introduction to “Difference” and “System” GMM in Stata”, Center for Global Development Working Papers, No:103, December.
  • Roodman, D. (2008). “A Note on the Theme of Too Many Instruments”, Center for Global Development Working Papers, No: 125, May.
  • Sarkodie, E. E. ve Yusif, H. M. (2015) “Determinants of Life Insurance Demand, Consumer Perspective – A Case Study of Ayeduase-Kumasi Community, Ghana”, Business and Economics Journal, 6(3): 1-4.
  • Schich, S. (2009) “Insurance Companies and the Financial Crisis”, OECD Financial Market Trends, No. 2009/2, October: 1-31.
  • Schich, S. (2010) “The Role of Insurance in the Recent Financial Crisis”, Insurance Markets and Companies: Analyses and Actuarial Computations, 1(1): 45-53.
  • Tamura, K. ve Tabakis, E. (2013) “The Use of Credit Claims as Colleteral for Eurosystem Credit Operations”, European Central Bank Occasional Paper Series, No. 148, June.
  • Tatoğlu, F. Y. (2013) İleri Panel Veri Analizi: Stata Uygulamalı, 2. Baskı, İstanbul: Beta Yayınevi. Willie, M.M. (2015) “An Analysis of the Healthcare Premium Determinants Using Mixed Models”, Health Systems and Policy Research, 2(1-3): 1-8.
  • Wilson, T.C. (2013) “Risk Management in the Face of Risky Sovereign Debt: Four Observations”, BIS Papers, No. 72.
There are 45 citations in total.

Details

Primary Language Turkish
Subjects Economics
Journal Section Research Article
Authors

Batu Tunay 0000-0002-9040-5831

Necla Tunay 0000-0002-8765-276X

Publication Date April 1, 2018
Acceptance Date January 22, 2018
Published in Issue Year 2018 Volume: 18 Issue: 2

Cite

APA Tunay, B., & Tunay, N. (2018). In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe. Ege Academic Review, 18(2), 179-194. https://doi.org/10.21121/eab.2018237349
AMA Tunay B, Tunay N. In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe. ear. April 2018;18(2):179-194. doi:10.21121/eab.2018237349
Chicago Tunay, Batu, and Necla Tunay. “In the Debt Crisis Axis Income-Based Determinants of Insurance Premium Production In Europe”. Ege Academic Review 18, no. 2 (April 2018): 179-94. https://doi.org/10.21121/eab.2018237349.
EndNote Tunay B, Tunay N (April 1, 2018) In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe. Ege Academic Review 18 2 179–194.
IEEE B. Tunay and N. Tunay, “In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe”, ear, vol. 18, no. 2, pp. 179–194, 2018, doi: 10.21121/eab.2018237349.
ISNAD Tunay, Batu - Tunay, Necla. “In the Debt Crisis Axis Income-Based Determinants of Insurance Premium Production In Europe”. Ege Academic Review 18/2 (April 2018), 179-194. https://doi.org/10.21121/eab.2018237349.
JAMA Tunay B, Tunay N. In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe. ear. 2018;18:179–194.
MLA Tunay, Batu and Necla Tunay. “In the Debt Crisis Axis Income-Based Determinants of Insurance Premium Production In Europe”. Ege Academic Review, vol. 18, no. 2, 2018, pp. 179-94, doi:10.21121/eab.2018237349.
Vancouver Tunay B, Tunay N. In the Debt Crisis Axis Income-based Determinants of Insurance Premium Production In Europe. ear. 2018;18(2):179-94.