Date of this Version
ASTIN Bulletin: The Journal of the IAA
Regression techniques are applied to an unbalanced panel data that includes 68 countries observed over a ten-year period, to explore the factors that affect non-life insurance demand across nations. While previous literature has discovered several significant economic, demographic, and institutional variables, little attention has been devoted to cultural dimensions. We find that non-life insurance consumption is adversely impacted in countries where a large fraction of the population has Islamic beliefs. Also highly significant are three of the cultural scores developed by Hofstede in a celebrated study: Power Distance, Individualism, and Uncertainty Avoidance. An important finding is that culture impacts non-life insurance more in affluent countries, with an adjusted R-square coefficient increasing by 11.7%, than in developing countries where the R-square coefficient increase due to cultural impacts is only 1.2%. These results have implications for multinational insurers seeking to enter a new market. Ceteris Paribus, these insurers should target countries, and population segments within these countries, that exhibit low Power Distance, and high Individualism and Uncertainty Avoidance scores.
This article has been published in a revised form in ASTIN Bulletin: The Journal of the IAA - https://www.cambridge.org/core/journals/astin-bulletin-journal-of-the-iaa/article/the-impact-of-culture-on-the-demand-for-non-life-insurance/60521B67FD1E7243195E4C69F31726E5.
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non-life insurance, cultural variables, econometric analysis
Park, S., & Lemaire, J. (2012). The Impact of Culture on the Demand for Non-Life Insurance. ASTIN Bulletin: The Journal of the IAA, 42 (2), 501-527. Retrieved from https://repository.upenn.edu/statistics_papers/612
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Date Posted: 25 October 2018
This document has been peer reviewed.